ASCM Insights

Rapid Experimentation Drives Results

Fri, 22 May 2020 00:00:00 -0500

In recent years, most businesses have shifted from a focus on data collection to struggling with how to analyze and organize overwhelming amounts of information. Using data to draw helpful conclusions is of course a worthy pursuit. However, sometimes the greatest results come from simple experimentation.

This concept is being driven home by COVID-19’s physical distancing challenges in large cities. Specifically, as health care professionals, essential workers and many others keep things moving for the rest of us, limited transit service is a significant hurdle.

“Everything we’ve ever learned about efficiently moving more people in as little space as possible has now been turned on its head,” writes Tiffany Chu in Forbes. “We must find new ways to achieve the goals placed on transportation service delivery.”

Chu cites numerous examples of cities using rapid experimentation to evaluate existing infrastructure, identify new ways to get people to work and adapt transportation systems —often with few staff members and constrained budgets. For example, after car travel plummeted, nearly 200 cities around the world responded with solutions that normally would have taken months or even years to implement. Some repurposed streets to make room for pedestrians and cyclists. Others expanded sidewalks in front of essential businesses.

“These solutions can use simple tools and low-cost materials like cones, barricades, signs, and movable bollards — and allow for planning and execution in a matter of weeks,” Chu says. “The creativity, adaptation, and unprecedented speed behind this will keep us safe and lay the foundation for a more sustainable recovery.”

Of course, this concept has applications far beyond our cities. To use rapid experimentation to advance your supply chain organization, she cites three considerations:

1. Prioritize areas of greatest need. Just as cities are focusing on vulnerable populations, supply chain organizations must prioritize ethical and environmentally responsible practices as we work toward recovery.

2. Build a thoughtful network. Many city leaders recognized that shutting down a street can cause crowding and risk public health, while opening streets helps residents get to and from essential locations more safely. Similarly, keeping the lines of communication open offers the greatest potential for outcomes that benefit all stakeholders.

3. Embrace the “temporary.” Instead of expensive civil engineering projects requiring heavy construction, cities are identifying what’s possible today. Supply chains can use pilots to explore, test, study and learn. Also, just as many cities are collecting community opinions on what works and what doesn’t, always seek feedback from your customers and employees.

Go for it

On a personal level, staying in our homes keeps us safe during this uncertain time. However, as supply chain professionals, we must get outside our comfort zones, take risks and innovate. ASCM is here to support you with industry-leading education, research and content. Tap into these essential member benefits to reinforce your bold steps to a better future.

Force Majeure: Has Your Company Reached the Breaking Point?

Thu, 21 May 2020 00:00:00 -0500

Editor’s note: David Steven Jacoby is CEO of Boston Strategies International, a supply chain and operations management consultancy. He is an expert in force majeure, a clause in contracts that essentially frees both parties from liability or obligation in the event of an extraordinary circumstance, such as COVID-19. Jacoby recently spoke with ASCM’s Tim Piotrowski about when and how to review customer and supplier contracts and what anticipatory actions can help mitigate risk.

Piotrowski: What is a force majeure clause, and what does it cover?

Jacoby: I would generally describe it as a “get out of jail free card” in a contract. It specifies certain circumstances under which the obligations in the contract are no longer enforceable. To that extent, it exonerates either party — it could be the customer, or it could be the supplier, depending on the wording — of its responsibilities under the contract. These clauses can be anywhere from a few lines to a few pages depending on the nature and scope of the agreement and the size of the deal involved.

If you're talking about a large long-term contract where force majeure can be anticipated to be a possible remedy, those clauses typically include various types of conditions that might qualify for exoneration of contract responsibilities. Some of those are social-related, like social unrest and worker unrest of various kinds. Some are weather-related, like fire, flood, heat, storms. Some are war-related.

If there's a war, basically, all bets are off. I've worked a lot in war zones and in conflict areas where these are discrete and real possibilities. Some of the clauses are economic force majeure, which involve supply chain breakdowns and price volatility, the extent to which it could have been anticipated at the signing of a contract. Then, there’s this thing called act of God, which is often ill-defined, but the classic example is a lightning strike.

Piotrowski: Based on what you are seeing with the current COVID-19 crisis, how have people and organizations been using force majeure?

Jacoby: Viruses and health epidemics are often not explicitly called out in force majeure clauses. This can be the distinction between the short clause that I mentioned earlier and the long clause. Here’s a case where, if you’ve had really good legal advice, and if you put effort into the contract, it would spell out and make explicit the potential for a health crisis like COVID-19 to be part of that force majeure clause. But most contracts did not anticipate this.

Piotrowski: If a supply chain organization’s current agreement doesn’t include a force majeure clause, what does that mean for me today?

Jacoby: There are a few things that you might be able to do. One is you could claim force majeure anyway. Force majeure is so well-known, it could hold up in court even if it’s not explicitly part of the contract. In that case, you’re going to need a lawyer, you might need to litigate, and it still might not hold up, depending on many, many factors.

The second thing you could do is attempt to use other clauses that may get you to the same place as if you had a force majeure clause. If you have anything in the contract related to work stoppages or conditions under which delivery could be curtailed, delayed or re-evaluated, those types of conditions might allow you to renegotiate the contract or even potentially get out of obligations while not specifically invoking force majeure.

Piotrowski: Do you always advise securing a force majeure clause when putting together a contract?

Jacoby: Any well-drafted contract should have a force majeure clause. I’ve dealt with many contracts, helped companies negotiate these contracts and helped them operate within the boundaries of these contracts. Honestly, all contracts of any scope and significance should have a force majeure clause. … If you have a contract, and it’s not in there, you should amend or even terminate and renegotiate the contract. Make sure it specifically calls out epidemics and pandemics.

Piotrowski: What are some ways supply chain organizations can protect themselves in a crisis besides invoking a force majeure?

Jacoby: One of them is to delay or defer purchases. If you don’t have the ability, or don’t want, to declare force majeure, you might be able to simply extend, delay or defer purchases. Look at some of the mandates coming from the government regarding mortgages and credit card debt and other types of financial liabilities. Basically, what a lot of them are doing is allowing a deferment of the payment. That’s become almost a commonly accepted accommodation for the problems caused by the coronavirus.

Some products are unavailable, but others are, so substituting product is another option. While it might not satisfy everybody’s needs, it might get you over the contract hump. You could also look for price-adjustment opportunities. If the contract in any way allows for indexation, or if you have a volume purchase agreement with breakpoints based on volume and price, they might come into play.

If none of those options gets you where you need to go, you could terminate the contract. In that case, see if you have a termination for convenience clause. If it’s not for convenience, you might still be able to terminate it.

Finally, I know this is kind of a Hail Mary, but you could declare bankruptcy if you need to protect from a very large liability that is an existential threat to your company.

Piotrowski: Is there any current data on how many supply chain organizations are using or will use force majeure and what that means for the industry?

Jacoby: I would say that May is going to be very busy for force majeure. It’s the fall after the reporting period. Most of the Q1 financial results were reported in April. Some will still drag out into May or even June. During that whole period, all these companies will be trying to endure the financial stress. We’re getting close to the point where companies will need to renegotiate or even break some very big contracts.

9 Essential Elements of Supply Chain Continuity Planning

Mon, 18 May 2020 00:00:00 -0500

COVID-19 containment efforts have severely affected supply chains nationwide, creating repercussions for original equipment manufacturers (OEMs) and supply chain managers across numerous industries. The pandemic serves as a reminder of the importance of proactive planning for manufacturing and supply chain continuity. In the grip of any crisis, those who have established thoroughly vetted continuity plans can more effectively sustain operations, maintain quality standards, consistently meet customer project deadlines and be poised to recover quickly.

OEMs tend to ask suppliers and prospective suppliers, as a matter of course, whether they have business and supply chain continuity plans. If the answer is yes, it’s essential for OEM decision-makers to follow up by thoroughly understanding what those plans entail. Otherwise, they risk their own ability to be agile in responding to implications from a crisis. Partners must work together to gain a clear understanding of what continuity plans encompass in order to ensure they cover a variety of potential risks — whether a pandemic, natural disaster, cybersecurity breach or some other devastating event.

Supply chain continuity plans should address, at minimum, nine key areas:

1. During the present pandemic, remote business operations have proven to be paramount. Supplier-partners should be virtualized and have remote work plans and policies in place, be able to explain how they will deploy employees outside of plant locations, and clarify how quickly they can implement these work processes. All personnel should be able to connect remotely to the systems necessary for them to carry out their job responsibilities. Suppliers should be able to detail the technologies they have installed to enable these connections, including ensuring that employees have laptops or other necessary devices, and their plans for supporting higher-than-usual demands on bandwidth.

2. Remote machinery operation allows continued operation and production without constant employee oversight. The supplier-partner also should be able explain how its personnel will address machinery operations that must be done on-site, such as manual loading and unloading of material.

3. A crisis can have greater impact on one location’s ability to operate than others. Therefore, suppliers that have multiple locations offer OEMs increased confidence that production can continue unabated. Ideally, recognizing that geographic areas also can be differently affected, suppliers will have facilities in more than one city.

4. Supplier-partners should be able to provide assurance that they have proper security across physical sites. Security measures should include, among others, fire and intrusion alarms, surveillance technology and/or personnel, as needed, and access control, which includes locks, key cards and device authentication.

5. Suppliers should have redundancies in at least four categories: alternate machinery, preferably at each of its locations; backup production suppliers; plans for supply chain shifts that permit uninterrupted flow of parts and materials; and complementary employee skills, with documented cross-training procedures for critical functions.

6. Cybersecurity is vital, as criminals frequently take advantage of crises to try to steal data or stall targets’ operations. Employees often are a preferred entry point, and the risk of data exposure may increase exponentially when employees work from home. Risk-aware organizations will have in place reliable firewalls, multifactor authentication, intrusion detection and other operating protocols to protect sensitive company and customer data. These businesses also will have implemented security awareness training that minimizes vulnerabilities by teaching employees safe online practices.

7. Recognizing that not every channel will be right for every situation and that some systems may rely on an unavailable internet connection, suppliers should have multiple communication systems in place to connect with customers, suppliers, employees and the community during a crisis. These may include email, phone, texting, signage, its website and social media outlets.

8. OEMs typically keep a close eye on revenue, cash flow and profitability. Given the importance of finances to business operations, they should pay attention to their supplier’s financial stability, as well. Strong financial performance, minimal debt and good lines of credit are indicators that partners will be able to weather a storm.

9. The list above is not comprehensive for every entity. OEMs and supply chain managers should diagnose other areas of risk exposure for their businesses, then research and implement strategies to mitigate them.

COVID-19 has served as a dramatic reminder that actionable business and supply chain continuity plans are critical. Equally vital is to periodically review and update plans as operations shift, new risks are identified, obsolete machinery is replaced and other business changes occur. Ideally, the partners will run annual simulations and checks of internal alert levels to indicate specific actions or procedures personnel would need to execute in a crisis.

To minimize project delays in times of uncertainty, OEMs and supply chain managers are well served to ask their partners for details about their business continuity strategies and request that they address any areas that aren’t buttoned up. When partners work together, they are most likely to develop mutually beneficial continuity plans.

Resilient Companies Need Resilient Workers

Fri, 15 May 2020 00:00:00 -0500

A recent article from McKinsey & Company proposes: “Imagine a crisis that forces your company’s employees to change the way they work almost overnight. Despite initial fears that the pressure would be too great, you discover that this new way of working could be a blueprint for the long term.”

Yes, telecommuting is a massive shift. But today’s workforce challenges are about a lot more than Zoom meetings and mastering the art of being productive from your kitchen table. Even before the global pandemic, emerging technologies were disrupting roles and responsibilities. In fact, back in 2017, McKinsey estimated that 375 million workers would have to either switch occupations or acquire new skills by 2030.

That dynamic, combined with today’s record-high unemployment and heightened awareness of supply chain, are presenting remarkable opportunities for our profession. Now is the time to build a superior supply chain workforce of the future. And that hinges on education, training, reskilling and upskilling.

McKinsey cites six key steps:

Identify the proficiencies your recovery business model depends on. Map out which skill pools will disproportionately affect it and drive it forward. To do this, identify crucial value drivers and employee groups. Specify their contributions to value creation, and reimagine how their day-to-day work will change as a result of value shifts. Identify the behavior and skills needed. Finally, specify the quantity and type of people you need.
Build employee skills essential to your new business model. Upskill the critical workforce pools that will drive a disproportionate amount of value in your adjusted business model. Establish a “no-regrets” tool kit — one that is useful no matter how an employee’s specific role may evolve.
Launch tailored learning journeys to close skill gaps. Obtain a detailed view of the core activities that critical groups will undertake in the next 12-18 months and which skills each of these groups require.
Start now, test rapidly, and iterate. Whatever education and training you do today should also be used to expand your capabilities tomorrow. By building your own institutional learning, and capturing what works and what doesn’t now, you position yourself to apply those lessons during future disruptions.
Follow agile principles and make bold moves quickly, while maintaining a clear view of your skill deficiencies in order to prioritize the gaps you need to address and select the right candidates for reskilling.
Protect education budgets. If you cut your budgets now, you’re only delaying the investment you will need after recovery. Don’t waste years when you could be developing resilience now.

Take the lead

On May 28, Kent Brown, supply chain practice leader at Korn Ferry; John Caltagirone, founding director of Loyola University’s Business Leadership Hub; Elizabeth Rennie, Editor-in-Chief for SCM Now magazine; and I will present the free webinar, Supply Chain Workforce of the Future. We will explore

why superior workforce development, talent management, and diversity and inclusion are essential to achieving resilience
how supply chain leaders can maximize this moment of understanding to close the talent gap
the key characteristics to cultivate in your employees, based on Korn Ferry’s digital survey, ASCM’s salary survey and Loyola’s academic studies
the importance of prioritizing a people-first mindset and an ongoing focus on ethical business practices.

COVID-19 has underscored the need for resilient supply chain professionals to lead their companies toward a better future. Begin acquiring some of these essential skills by attending this insightful event.

Gain Supply Chain Wisdom From the Experience of Others

Thu, 14 May 2020 00:00:00 -0500

Did you know that 70% of supply chain projects fail? And if the project involves software, the failure rate can go as high as 85%. There are countless reasons why supply chain failures occur, but some common ones include

difficulty making scope-related decisions
dysfunctional supply chain planning
supply chain metrics working against each other
inefficient resource management
unrealistic goals and deadlines.

So, if projects fail all the time, what happens when you're facing unimaginable uncertainty? Seeing a project through during a crisis is particularly daunting. In the face of COVID-19, supply chain managers may be wondering how their organizations will ever bounce back from the effects of the pandemic and what they can do to prevent a disastrous breakdown. The key is to anticipate and mitigate the potential risks, establish an effective strategy, create an exceptional plan, follow it up with a precise execution, and understand the recent trends and hacks.

One of the best ways to do all of that is by looking at historical examples and understanding what went wrong at other companies. Following are six stories of real-life supply chain project management failures. Each has a takeaway to make your organization even more effective in the future.

1) Adidas, 2019: Supply chain shortage: In Adidas’s 2018 annual report, it stated that sales growth for the company would be negatively affected in 2019 due to “supply chain shortages.” At a news conference, CEO Kasper Rorsted said, “The volume grew quicker than anticipated and we didn’t respond quickly enough to that demand signal.”

Maintaining balance in a supply chain is extremely important. Adidas failed to do its research and, therefore, couldn’t anticipate that demand for its products would be so huge. The takeaway here is the importance of understanding demand surges and having the agility to make necessary adjustments instantly. The earlier changes are made in the supply chain process, the easier it will be to meet demand.

2) Kentucky Fried Chicken, 2018: Abruptly changing delivery partners: In 2018, 2018 KFC changed its delivery partner, which didn’t go exactly as planned: This change led many of the food deliveries to be delayed. Customers were unsatisfied with the service and usually had to order from a limited set of options, as the stock in certain KFC stores was limited. Several KFC outlets were even forced to shut down. According to a press release by the company, KFC “brought a new delivery partner onboard, but they've had a couple of teething problems. Getting the fresh chicken out to 900 restaurants across the country is pretty complex!”

It is essential to know what changes you need to incorporate as a result of any decision made by you or your company. Changing from a special food delivery partner to a general delivery company, for example, can have negative results — particularly if, like KFC, you don’t focus enough on the transition. Always analyze the possible outcomes of making changes to your supply chain process; this way, you have an idea of what could go wrong and how to overcome the problem.

3) Target, 2015: Supply chain traffic jam: In contrast to the supply chain shortage Adidas experienced, Target faced a supply chain failure due to oversupply. Although their shelves were always stocked with products, they weren’t being sold at the same rate. As a result, in 2015, Target was forced to close all 133 locations in Canada. This cost the company a whopping $2 billion.

Maintaining an equilibrium between the supply and demand process is essential to keeping a company alive and increasing profit margins. Always do market and customer research before any major launch or expansion. To avoid overstock, consider deploying a project management software to help track and understand customer purchases and make it easier to understand the demand margin and order the appropriate amount of supplies.

4) Oculus Rift, 2016: Overpromising: In January 2016, Facebook introduced Oculus Rift, a virtual reality headset, and started taking preorders. The Rift was sold out on the first day. It was a significant achievement for Facebook, but what followed was a nightmare by customer service standards. Preorders were dispatched beginning in March, but by May, stock was limited again. Some who had preordered had to wait until the end of July to get their Oculus Rift.

When you take the preorder route, it is essential to match the supply and demand numbers and have a product timeline in place. Facebook’s customers were excited and expected the product to be amazing. But the supply chain process flawed, and delivery was hugely delayed. If a product cannot be launched within two weeks of the preorder date, this strategy is not a good way to go about increasing sales.

5) Yodel, 2009: Failing to meet demand: Yodel is the biggest parcel delivery company in the United Kingdom. After acquiring DHL, its customer base and numbers increased exponentially. By 2014, Yodel couldn’t handle the massive demand. During the high demand holiday shopping and shipping season, Yodel was unable to consistently pick up parcels from retailers, which resulted in a major setback in terms of customer expectations and brand value.

When taking over another company, it is essential to analyze all the aspects and ensure your company can handle the extra baggage. Yodel took over DHL without considering the added demand or increased customer expectations. From supply chain management to customer satisfaction, changes need to be customized to match the newly merged company.

6) Mattel, 2007: Reliance on offshore suppliers: One of the most infamous supply chain failures of 2007 was Mattel’s recall of 1.5 million toys. The company had outsourced its work to multiple suppliers, resulting in a substantial quality failure. One supplier, Early Light Industrial, was diligent about product quality ; however, the business had offshored one job — painting toy cars — to Hong Li Da, which did not use the paint supplied by Early Light. Rather, Hong Li Da used paint that contained lead, which can be fatal to children.

When it comes to supply chain management, companies must perform a quality check of each product before putting it in stock. Early Light did take all measures possible to solve this issue, but the damage to its reputation was done. You must know your suppliers’ entire process so potential risks can be anticipated and supply chain failures can be avoided.

Deploy the Solution

Supply chain is a domain that embraces positive change and continuously strives to improve its functions and performers. There are hundreds of thousands of supply chain projects running simultaneously around the world. They provide food and goods to a population of seven billion people who are struggling with the consequences of the pandemic and an uncertain economy. Because most of those projects are intertwined, the success or failure of one of them affects the others. Thus, today, more than ever, the logistics need to be flawless and system driven. As systems and networks become increasingly supported by well-planned strategies, the processes get more streamlined. This is the kind of preparation that will help a supply chain prevent a failed project when customers are depending on them the most.

David Miller is a technical writer with experience in project management software. Follow him on Twitter @davidmiller4312 or connect on LinkedIn.

Cracking the Bullwhip Effect

Wed, 13 May 2020 00:00:00 -0500

The COVID-19 pandemic is taking its toll on supply chains across the globe. As a result of changes in demand and consumer buying patterns, the bullwhip effect has rippled up and down our networks. What can industry professionals do to crack the bullwhip effect? First, we must remember that the focus of supply and demand is threefold:Deliver quality services to a business’s final customer.

1. Deliver quality services to a business’s final customer.

2. Acquire appropriate information about a product’s demand.

3. Provide the demanded product to the customer on time and with consistency.

In the past, production planning used forecast demand for products, derived from earlier patterns of customer use. Today, however, supply chains that have embraced digital transformation are changing the ways in which materials, information and financial flows are managed within the integrated business network — customers, retailers, wholesalers, distributors, manufacturers and suppliers. Now, demand is transferred from one set of participants to another.

In addition to global disruptions, such as the one we are experiencing currently, the bullwhip effect occurs when there is lack of information and communication among the participants, causing administration hurdles. Managers order inventory based on historical data to meet expected demand; to prevent going out of stock, suppliers also need some safety stock. This perception of the business of supply leads to demand variability and increases the chance of error in forecast demand, causing the bullwhip effect.

Through this distortion in forecast demand, the profitability and performance of the organization is reduced. Meanwhile, inventory holding costs increase, which may lead to stocking obsolete inventory. Therefore, to crack the bullwhip effect, it is important to understand where the inventory is; what is the actual demand; and, most importantly, that the forecast demand should be properly aligned with each level of the supply chain. With the help digital information flow, businesses can prevent the distortion of demand.

Causes of the bullwhip effect

As previously explained, the bullwhip effect occurs when there is a lack of understanding about demand among supply chain participants. People, therefore, must be trained to analyze the effects of the decisions they make in the ordering system so that they can identify any perceived distortion in the demand. Moreover, information and material delays might contribute to the bullwhip effect. When supply chain participants eliminate time delays, the demand amplification can be significantly reduced.

At each level of the supply chain, participants predict demand with the help of customers’ historic data or buying patterns. But, after orders move from retailer to distributor and distributor to producer, the forecast demands must be modified. The longer the supply chain, the more participants it requires at each stage, which increases the chance of unstable demand among participants. It also increases the chance of obsolete inventory when there is no visibility — or understanding — of actual customer demand.

The grouping of orders depends on the internal strategic policies and criteria of companies. For example, firms are more likely to order regularly, and in greater quantity, from a major supplier to gain economics of scale, to achieve a reduction in transportation costs, and to get discounts on a full truckload. However, larger orders create more variability and opportunities for order-cycle overlap, which increases the likelihood of the bullwhip effect.

To prevent order batching from creating the bullwhip effect, an organization can deploy electronic data interchange (EDI), a method for transferring data among different computer systems or networks and creating links between retailer and supplier. EDI can help reduce the cost of the paperwork by generating an order electronically and informing the supplier, who can stipulate delivery quantities based on how much inventory is sold versus how much is in the distribution center. This practice reduces the distortion of inventory information and leads to customers placing more frequent orders.

Often, when prices are low, retailers stock up products to proactively prevent demand uncertainty before any seasonal activity or price promotion. This technique can lead to the bullwhip effect, as well. However, now that many organizations are implementing vendor-managed inventory (VMI), both the shortage gaming effect and the order batching effect might be completely eliminated. VMI helps the retailer ensure that their end consumer gets the right quantity of stock. Having the right amount of stock isn’t just a financial advantage; it improves service level and increases repurchase intention. With a VMI strategy, the supplier can track customer demand and manage the replenishment of orders and deliveries across many customers by receiving and implementing information related to the points of sale and forecast demand. Likewise, to overcome demand spikes, retailers are prepared to communicate information to their suppliers about promotions or other marketing campaigns to meet the requirement of the on-time delivery of any additional items.

Supply variability, including machine reliability and quality problems, is another potential cause of the bullwhip effect. Outputs from unreliable machines fluctuate, and that fluctuation can trigger the variability of demands for the members of the supply chain that are on the upstream of that machine.

Finally, when demand exceeds supply, a rationing of products can occur. When retailers are afraid that their supply will not be able to meet the desired demand, they start to overestimate their real needs. For example, sometimes customers are allowed to cancel orders when their real demand is fulfilled, which leads retailers to rely on a small amount of information and get confused about the buying pattern of consumers.

The following considerations can also help crack the bullwhip effect:

When a company has a suitable control system, it allows its trading partners to meet customer-targeted demand. Because of the system’s controls, the guessing game of predicting upcoming demand might be removed from the supply chains.
Accomplishing activities on time is critically important. Decreasing the amount of time spent can reduce the effect of the bullwhip. Each process and operation should be completed in the shortest amount of time possible; removing non-value-added activities goes a long way toward achieving the objective of leanness in an organization. It also means that the organization is providing the product to its customers on time, which is highly valuable for the business and customers alike.
Visibility is another effective method; when each stage of the supply chain is clear to the other, including understanding at what level inventories are required, then tasks can be transferred easily. With the help of an appropriate information system to optimize inventory, there should be a limited level with each object in the supply chain, allowing organizations to provide the right product, in the right place, at the right time.
Another reason for large order batches is the high cost of transportation. Full truckloads are often much more economical than less-than-full truckloads. One remedy to this problem is the use of a third-party logistics provider (3PL). 3PLs have many customers and can combine orders of different customers, which makes it possible to order less-than-full truckloads for a lower price.
Synchronization, such as through the tactic of continuous ordering, is another alternative. This process enables organizations to integrate all functions within a supply chain and enhances the visibility of orders and deliveries, eliminating the bullwhip effect.
Bullwhip can also be cracked by an everyday low-price policy (EDLP). With EDLP, companies do not offer discounts but promise a stable low price at all times, which saves customers the effort of searching for the best price and experiencing cost variability. In practice, many companies use EDLP strategy to compete with other firms, decrease price fluctuation, and encourage frequent buyers while increasing the sales volume of retailers.
Forecasting cannot be perfect every time; many businesses cope with this fact by keeping buffer stock, a practice that can create the bullwhip effect. To avoid this, supply chain practitioners need to accurately identify the forecasted demand and collaborate their planning and forecasting activities with each supply chain participant, which facilitates better visibility through shared information. This eventually reduces variability in demand uncertainty and production planning, cracking the bullwhip effect and leading to better forecasting and lower safety stock.

While these methods are a powerful antidote to the bullwhip effect, supply chain is rapidly changing; sometimes, these strategies are not enough. Technology-driven solutions can make a big difference to real-time visibility. Let’s take a look at four new technologies that have been created as alternatives to the methods listed above and are viable options for analyzing and eventually eradicating the major sources of the bullwhip effect in supply chains:

1. Cyber physical system (CPS) technology processes and collects information in real time by connecting devices within a network, which magnifies the information base, increases information availability and enables visibility of material flows in the supply chain. With these advantages, the bullwhip effect can be reduced easily because CPS provides quality feedback loops, which eventually reduces the time delay and overall processing time in manufacturing. Furthermore, operational information created under this system should be shared and available, which improves demand forecasting.

2. Cloud computing enables flexibility and scalability of infrastructure and software for the entire supply chain, aiding in the implementation of available information and sharing information in real time across and within the supply chain. All this digitalization leads to time reduction and information consistency, reducing the bullwhip effect.

3. Artificial intelligence is one of the most effective and promising technologies to reduce bullwhip effect. It is renowned for improving demand signals processing and reducing time delay in supply chain by inferring and noticing patterns in data, which ultimately cracks the bullwhip effect.

4. Blockchain facilitates traceability and transparency of data among all trading partners in a network. By providing access to demand data in the supply chain, it is easier for parties to reduce the bullwhip effect and improve their planning accordingly. This technology removes the need of an intermediary and allows distributed information to be shared directly with interested parties, reducing information asymmetry and increasing trust, thereby permitting high data integrity and robustness.

Digital transformation has shifted the structure of organizations in terms of effective and visible management of the supply chain. And, by creating meaningful information systems across each element of supply chain, it increases the smooth flow of material, leading to the satisfaction of real customer demand and maximized profit. That is great news as we continue on the path toward recovery.

Honoring Supply Chain Heroes

Fri, 08 May 2020 00:00:00 -0500

I recently came across the hashtag #supplychainheroes while reading through ASCM’s LinkedIn feed. Talk about inspiring. The COVID-19 pandemic has flooded supply chains with obstacles unlike anything we have seen before. However, amid the deluge, industry professionals and their organizations are stepping up with some truly superhuman efforts.

Many business leaders have made the courageous decision to overhaul their normal operations in order meet urgent health care needs. One of these is John Carrington, president of Columbia, South Carolina-based 3D printing company ZVerse. “Just a few weeks ago, Carrington was looking at the stock market’s collapse, mulling over which of his 20-person staff to lay off and seeing investors bail on another round of funding,” writes Marcus Baram for Fast Company.

Today, ZVerse is a key player in the battle against the pandemic, and Carrington is hiring dozens of new employees to keep up with demand for millions of reusable face shields. “We started to get frantic requests from hospital administrators and even hospital CEOs, which is very uncommon,” Carrington says in the article. “The first request was from a local hospital that knew that we did 3D printing, which needed 5,000 face shields that same day.”

Carrington and his team finished the design within two hours. The following day, a county agency asked ZVerse to make 10,000 face shields. And the day after that, a hospital system requested 50,000.

Meanwhile, a few states away, more than 80 factory workers at Philadelphia-based Braskem America were volunteering for production plant “live-ins.” For 28 consecutive days, these team members worked to produce a critical material used in personal protective equipment (PPE) for frontline health care workers.

Braskem America makes polypropylene, which is used in medical gowns, disinfectant wipes and face masks. “The teams worked in rotating 12-hour shifts to keep production running to meet the surging demand, while remaining isolated on-site,” writes Julia LaRoche for Yahoo Finance. “The plants already include kitchens and locker rooms, so the company provided air mattresses, groceries, prepared food deliveries, iPads, and increased high-speed internet access for Zoom calls with family and friends.”

CEO Mark Nikolich told LaRoche that his first priority was to secure the health and safety of his team members. Braskem also paid employees for both 12-hour shifts, on and off, while they were on-site.

Just up the road in Jessup, Maryland, Acme Paper & Supply Director of Customer Satisfaction Maggie Duerr was running a warehouse that stocks everything from hand sanitizer to isolation gowns to disinfectant wipes. She has been integral in sourcing hundreds of thousands of PPE and other urgently needed products.

“When trucks roll in with only 50% of our order, because suppliers can’t keep up with demand, we allocate products to appropriate customers first,” Duerr told The Baltimore Sun, adding that health care, nursing home and school accounts are absolutely at the forefront.

“I am so proud to be in a different form of front line during this pandemic,” Duerr says. “But above all, we really want business to be back to normal.”

Highlight your heroes

When we think of heroes, we think of selflessness, courage, humility, compassion, extraordinary commitment — and now, people who are literally putting themselves on the line for the greater good. Do you know a supply chain hero who embodies these traits? Has your organization pioneered new methods and processes in order to produce essential supplies? ASCM is compiling stories of supply chain heroism to share on LinkedIn, Facebook and SCM Now magazine. I hope you will tell us your story using #supplychainheroes and #ASCM in your post.

Lastly, the ASCM Awards of Excellence recognize superior performance and dedication to advancing the field of supply chain management. The deadline has been extended to May 31, submissions are free, and you may enter in multiple categories. Submit an entry today to recognize a trailblazing corporation or outstanding supply chain professional.

Fill Your Cultural Reservoir to the Top

Thu, 07 May 2020 00:00:00 -0500

Every person and process can be improved. However, superior leaders know that the keys to success are attitude and approach. When greeting any new situation, we of course must be engaged and confident enough to believe we have the right solutions. But it’s critical to also enter with a mindset of humility, possibility and progress. Perhaps most importantly, the desire to learn and develop a team spirit enables leaders to deliver results. A leader’s attitude and approach can either fertilize or poison the soil, producing beautiful flowers or noxious weeds.

Not long ago, I had the opportunity to take on the role of manager at a Moen distribution center (DC) in Las Vegas. My team and I were tasked with improving safety, reducing costs through optimized material movement and raising employee satisfaction scores via improved work systems.

As I reflect on our six-year journey, the one distinctive characteristic that propelled our success time and again was the organizational culture we were creating. It enabled our work, fueled our achievements, and unlocked the potential of our associates — both individually and collectively.

Specifically, in the most important area of employee safety, our DC experienced three perfect safety years with zero U.S. Occupational Safety and Health Administration recordable incidents as a result of the initiative. Throughout the entire period, we had zero lost-time incidents — not a single associate missed a day of work because of injury. Secondly, we reduced cost per carton — the primary corporate cost metric for DCs — by 30%. This represented a substantial cost savings for Moen. Finally, in the area of employee satisfaction, survey scores went up by 34% and were among the highest in the company.

In the end, our DC was recognized with two prestigious honors: the Global Operations Excellence Award and the President’s Achievement Award, Moen’s highest recognition.

GUIDING PRINCIPLES

Following are the key philosophies and values we employed, which influenced our approach, priorities and decision-making:

People are the most important resource; treat them as such. Respect others as individuals, develop trust and respect, and be kind.
Use passion to fuel focus on customer service and achievement.
To cultivate mindsets of ownership and accountability, ensure performance metrics are in place.
Use a process focus to establish consistency and repeatability. This is vital to continuous improvement efforts.
Make plans, and go forward. Don’t let the pursuit of perfection prevent progress, but never be reckless.
Personal excellence has a team emphasis. A star player should make the team better, not resentful.

At the beginning of this transformation, we used a pyramid to visualize key performance indicators (KPIs). The measures were safety, process, quality and output. (See Figure 1.) However, it wasn’t long before we reconsidered our pyramid’s foundation. We came to realize that all aspects of performance are affected by employee relations — in other words, culture. It is the prevailing force that supports and, ideally, boosts every other metric. Therefore, we redesigned the pyramid with culture at its base.

An annual company-wide survey evaluated our team’s culture. We assessed responses across 11 categories. The first year of our journey, we scored a 59 out of 100. To address concerns identified in the survey, individual feedback was given, and focus groups were conducted. Then, our leadership team took action. By the project’s end, the score was 79 — a 34% increase and 22% above the company average.

A focus on culture yields benefits in both soft and hard performance metrics. It creates an environment in which employees enjoy coming to work. This, in turn, brings about improved safety, quality and productivity levels.

FLOODING THE CULTURE POOLS

Leaders must be just as diligent when furthering culture as they are when furthering other performance metrics. They should infuse culture considerations into every decision and initiative. The greatest leaders know how to leverage culture in order to unleash the kind of improvements that come naturally and freely from an energized team.

To motivate an organization, leaders first must inspire the people. Here, it’s all about how they present and implement ideas. This starts by always keeping in mind that we are all equal; we just have different roles. With this mentality, it’s easy for a leader to demonstrate genuine care and concern for people’s well-being. The single most important pursuit is to create an authentic connection with associates.

A major tenet is the concept of a touchpoint. At Moen, our leadership team talked a lot about how, with every encounter and interaction, we can have either a positive or negative impact. Leaders must look for and generate opportunities to have personal, positive interactions with associates. A touchpoint can be a simple action, such as greeting others with a smile and a friendly hello or calling associates by name. Offer a sincere thank you, send a handwritten note, or share a meal together. Give the gift of yourself, your uniqueness and your talents. Show your humanity and personality.

Another central aspect of culture development is adopting a servant-leadership mindset. Listen to associates, and act on their feedback. Keep their interests in mind, and think about ways you can make their lives better. Water is siphoned from the culture reservoir when associates see leaders who just work for the next promotion or strive for command and control by dictating, mandating and micromanaging.

A final consideration is knowing when to do things personally. Leaders must not delegate key activities, as these often are vital opportunities to interact with associates. Always seek opportunities to create moments and memories with others.

HOW WE DID IT

First and foremost, our teams focused on safety. As part of the safety program, all leadership team members were required to complete a certain number of safety audits each month. To set the example, I held myself to the same standards. Sometimes people would say, “Don’t you have more important things to do?” I would always answer, “I am doing the most important thing — safety first!” Our desire to keep everyone safe signified that we really care about our associates.

Next, we created vision statements, slogans and mottos to foster team spirit. Our quality slogan became “Moen’s Last Touch,” indicating that we were the final Moen associates to handle customer orders, so we needed to get it right. We even had an internal design contest to create our logo and awarded a prize for the winning submission. A championship banner was produced to memorialize every notable five Ss project. Pretty soon, we had a rainbow of pennants hanging from the rafters.

We implemented skill-based competency and pay-for- performance programs that offered career progression and monetary incentives for heightened productivity and quality. Most advances came from ideas shared by associates. This was highly encouraged. After all, these are the people who know better than anyone else what really is happening and how to make improvements. In the main hallway of the DC, we created a wall of fame with associates’ pictures and the levels achieved.

Quarterly leadership meetings were followed by team dinners, and monthly leadership luncheons were held for warehouse frontline leaders. There is power in sharing a meal together. Kevin Kniffin, professor of economics at Cornell University, puts it well: “Eating together has a long, primal tradition as a kind of social glue.”

In addition to the traditional top-down recognition pattern, associates were encouraged to acknowledge their peers and engage in random acts of recognition. We had lively monthly recognition parties, and once a year an associate who exemplified teamwork and a positive attitude would receive the Golden Link award.

In truth, we were constantly looking for things to celebrate because honoring achievements leads to positive motivation and continued success. We reveled in costper-carton reductions, quality enhancements, corporate feedback and any other notable news. My team enjoyed bowling outings, pie-eating contests, mariachi band performances, a holiday luncheon with big prizes and much more. During these celebrations, the leadership team mingled with associates and helped with planning, setup and cleanup.

TAKEAWAYS

Since the transformation, our team continues to excel, with two additional perfect safety years, another Moen President’s Achievement Award and ongoing improvement in survey scores. Looking back, I have landed on the following lessons learned and recommendations for rising your own company’s cultural tides: First, make culture a KPI. Second, ensure associates enjoy working for your direct reports — and that your direct reports are obsessed with improving company culture. If they need coaching, provide it. Similarly, employ people with culture development expertise. It should be an essential factor in hiring decisions. And, as a final piece of advice, ask yourself, “In what ways do I cause the tides to ebb and flow?” Then, figure out what you can do to make sure culture floods your entire organization.

‘A Little Bit of Flexibility Goes a Very Long Way’: Interview with Professor Ananth Iyer of Purdue University

Tue, 05 May 2020 00:00:00 -0500

Editor’s note: Ananth Iyer is senior associate dean and Susan Bulkeley Butler Chair in Operations Management at the Krannert School of Management at Purdue University. Freelance writer Holly Poulos recently interviewed Iyer about how coronavirus disease 2019 (COVID-19) is affecting the supply chain for retailers and consumers alike, as well as how recent panic buying has forced both large and small businesses to reevaluate how they manage day-to-day operations, reassure customers about inventory availability, and prepare for long-term ramifications.

Holly Poulos: How can retailers match consumer demand right now when they don’t have the usual data or other means for anticipating it?

Ananth Iyer: Customer demand is driven by rational customer balancing of A) their potential increased demand, B) worries about price increases, C) worries of when next they can go to the store and D) worries about shortages when they do go to the store. Retailers should work to reduce the anxieties associated with B, C and D.

First, stop classifying the customer as irrational. Instead, think of their decision-making as rational. That’s why I put in four separate buckets, because each of these is a different reason. If demand went up, you have to satisfy the demand. You need to buy more. That’s because either

people are using more hand sanitizer and hand soap or even toilet paper, because they have moved back home
there are worries about price increases
worries about whether stores will be open
worries about shortages.

Retailers can work to ease these customer concerns. Commit to saying, “Look, our pricing will remain fair. We’re not going to increase prices.” And actions speak louder than words.

The easiest way to solve the, “I’m worried that the store would have run out,” is for stores to be proactive. If stores are proactive, then customers see inventory in the stores and they’ll stop stocking up. Grocery stores should be out there reassuring customers that they’re in the business of satisfying customer demand and they’re going to try very hard to do it. That’s really what will ease some of these issues right now.

Poulos: What advice do you have for retailers that are having trouble meeting consumer demand for household goods following regular procedures?

Iyer: Retailers may need to be flexible regarding the brands they carry, the sources of purchase and use of online channels to fulfill demand. Each of the options require quick decision-making to ensure agility. Private label brands may be more easily available, but it is important to note that the grocery supply chain does have a lot of finished goods inventory, with past studies suggesting between 80 and 120 days of finished goods inventory of nonperishables across the supply chain.

But there are many other things to consider, and I think this is the part where it gets a little tricky. Many of the things that are focused on replenishing supply may well require things like extra shipping and full truckloads. Now’s not the time for [retailers] to pass along any price increases, because that will be viewed negatively. However, express shipping, taking full truckloads and scheduling third-party pickup with direct transportation may all involve higher logistics costs to increase availability. But that may need to be justified as part of maintaining or increasing customer goodwill.

There is a margin decrease that retailers may have to contend with. But the actual availability of inventory, I don’t think should be an issue, because manufacturers are still operating full tilt and distributors have lots of inventory. The key is the logistics of getting it to the store.

Poulos: A huge number of people are placing orders online. What should retailers keep in mind as they invest more heavily in e-commerce?

Iyer: First, if the focus is on customer satisfaction, e-commerce is great, because you get the product out there. The key is to do it efficiently. In some sense, you’re taking work that customers do themselves. When the customer goes to a grocery store, they do the work themselves. Whenever any retailer starts doing work that the customer used to do, then there are costs. The question is how to recover those costs.

Many, many retailers, thanks to Amazon Prime, have offered free delivery and free shipping and free pickup. All that free is actually expensive for the retailer. The one thing to think about is, “How on earth are we going to cover those costs? What are they going to do to get customers to pay in some form?” Usually, when you pay, you pay because of slightly higher margins. The prices go up to cover this cost; but you cannot increase [the price] during a pandemic. The balancing act for retailers is how efficiently they’re going to be to do this.

Some retailers, like Walmart and Target, have announced increased use of robotics and automation. Those may be ways to become more efficient, but those things can’t be done in a very short run. Yes, e-commerce is a great solution to satisfy the customer. But retailers need to actually recover those costs.

Poulos: For retailers that are nowhere near as large as Walmart and Target, what issues are they facing? How are small businesses offering services to customers stuck at home?

Iyer: For small businesses, the only way that they can be competitive is to understand customer data. The hope is that they have a relationship with their customers; they know who they are. If people come in and ask if there will be stock, small businesses can have a conversation. They may actually have more information regarding customer intent than larges businesses.

The key is to stay solvent, keep the flow going, keep people coming in. That would mean, in the short run, they may have to absorb lower margins, hoping that they can survive enough for the long run. They really don’t have the option for a lot of automation, but this may be the time for them to consider software tools — especially software-as-a-service — to help them keep track of their inventory, so they’re not missing anything.

Poulos: As a professor, what are you telling graduating seniors planning to enter the supply chain field?

Iyer: The key is how long it’ll take to get back to normal and what that new normal would be. Luckily, for now, we haven’t seen much of an impact on this year’s graduates. It’s really the next year’s graduates. … Those are the students who will face a very, very challenging market. We’ll see how that sorts out. What may end up happening is, if the market happens to be a little tough, we may see more students going to graduate school or getting additional qualifications, so that they’re ready for the job market.

There are many conditions that could change pretty quickly. The good news is I think the industry is being proactive. I’m hoping that the ports remain open, that the truckers remain operating and the store employees remain working — and nobody panics about catching anything because they went shopping for groceries. At the end of it all, I think both the supply chain managers and consumers will realize that a little bit of flexibility goes a very long way.

It’s Time to Put People First

Fri, 01 May 2020 00:00:00 -0500

This past week marked the 49th anniversary of the Occupational Safety and Health Act (OSHA), which sets and enforces baseline safety and health standards; guides employer responsibilities and reporting protocols; and provides workplaces with outreach, training and education. Since the passage of the act, working conditions have improved significantly, with approximately 600,000 lives saved. However, even before the era of COVID-19, too many people still faced serious danger, with falls, workplace violence, contact with equipment and exposure to harmful substances being the most common preventable fatalities. Of course, the pandemic is now presenting a whole new set of challenges.

People everywhere are agonizing over the choice between paying rent or protecting their health — particularly those who work in meat packing plants, which have become coronavirus hot spots. And now, President Trump has declared these facilities “critical infrastructure” in an effort to prevent shortages of pork, chicken and other products.

“The announcement provoked swift backlash from unions and labor advocates, who said the administration needed to do more to protect workers who often stand shoulder to shoulder in refrigerated assembly lines,” write Ana Swanson and David Yaffe-Bellany in The New York Times. “In many plants, workers cut and debone meat in tight conditions, share meals in crowded cafeterias and walk the same narrow hallways, making social distancing practically impossible.”

The United Food and Commercial Workers International Union says the Trump administration simply cannot order meatpacking employees to work without taking steps to protect their safety. This includes access to masks and other personal protective gear, performing daily testing, enforcing physical distancing and providing paid sick leave for infected workers.

“While we share the concern over the food supply, today’s executive order to force meatpacking plants to stay open must put the safety of our country’s meatpacking workers first,” says Marc Perrone, the union’s president, in a media release. “We cannot have a secure food supply without the safety of these workers.”

American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) President Richard Trumka echoes these points on Twitter: “Using executive power to force people back on the job without proper protections is wrong and dangerous. … We should not be focusing on when we can reopen the economy but rather on how we should reopen it to ensure the health and safety of working people.”

And Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, says in a media release, “We only wish that this administration cared as much about the lives of working people as it does about meat, pork and poultry.”

Protect your most valuable resource

A recent ASCM Insights blog post states that the most valuable asset of any business is a healthy and available workforce. The article, “Business Continuity in a Pandemic: Safeguard Your People and Partners,” by Fusion Risk Management Cofounder Bob Sibik, shares numerous strategies for adopting a people-first mindset. See this story and much more helpful content on ASCM’s free COVID-19 Resources Webpage.

People are the ones who fuel supply chains, who innovate and who are absolutely essential to a prosperous future. This is a critical moment to reframe how we think about our workers and empower them to help shape the circumstances of their daily lives.

Practice Good Cyber Hygiene to Protect Your Supply Chain During Pandemic

Thu, 30 Apr 2020 00:00:00 -0500

Cybercriminals are known to target the weakest points in any organization. Now, with the novel coronavirus sweeping the globe, organizations’ critical assets are at serious risk, as bad actors leverage the growing fear in order to gain access to employee passwords and sensitive data for nefarious purposes.

According to a recent report from Check Point Technologies, web domains associated with the coronavirus are 50% more likely to be from malicious actors. These cybercriminals are feeding off of the uncertainty in a time of crisis and using advanced tactics such as phishing to target unknowing users. The Federal Bureau of Investigation also released a statement warning constituents of an increased number of cyber attacks related to the coronavirus pandemic.

“Cyber criminals are opportunists that continuously evolve their methods of attack. And, as history has shown us, the more visible the situation, the more aggressive the cyberattacks,” says Nicholas Fischbach, Global CTO at web security firm Forcepoint.

Vital organizations are a prime target

These opportunistic cybercriminals have already begun seeking out both vulnerable users and organizations such as hospitals that would be devastated by a breach. According to an article from Health IT News, the World Health Organization, and the U.S. Department of Health and Human Services reported an uptick in cyberattacks — about double the norm before the pandemic. Other medical organizations, such as the Czech Republic’s second largest hospital, have reported cyberattacks while in the midst of testing for coronavirus.

As the health care industry continues to battle the coronavirus, they’re being tasked with simultaneously fending off cyber attacks. But, as the risk of these attacks increases during the COVID-19 crisis, so does the information security community. Some of the world’s most intelligent security professionals are volunteering to assist medical organizations in combating the influx of malicious cyber activity.

Preying on fear and anxiety

With the stress brought about by a worldwide pandemic, users may be more susceptible to letting down their guards when it comes to online threats. Today, more people are accustomed to seeing a variety of forms and portals asking for usernames, passwords and often payment information. Sophisticated cybercriminals and groups have become experts at crafting near perfect duplicates of legitimate websites.

Hackers exploit these vulnerabilities and play on society’s fears in hopes that their carefully crafted scams will be successful. “We are seeing trends of cyber attackers leaning into social-engineering that utilizes popular keywords — such as coronavirus and COVID-19 — to execute online scams, phishing and malware attacks,” Fischbach says. As the number of suspicious emails and web domains related to real-life events grows, users must remain vigilant and take the time to ensure authenticity and remain cautious about links, attachments, or inputting usernames and passwords.

Staying Secure

Information technology (IT) teams have been unexpectedly tasked with allocating budgets and resources to prepare the workforce to conduct their daily tasks remotely. Employees are accessing corporate resources and data in locations outside of traditional corporate networks and on devices that may not adhere to security policies, leaving them exposed and potentially vulnerable to the most basic of cybersecurity threats.

With this unplanned societal shift to a dependence on the digital infrastructure, user education is key to keeping an organization protected from cyberattacks. Just like social distancing and washing out hands, organizations and their workforces must practice good cyber hygiene during this outbreak. Following are three tips to help:

Use a virtual private network: You can’t fully trust your home WiFi network, especially now that users are connecting with new devices and applications. Organizations should enforce, at the very least, all users to access internal systems and online services using a VPN to securely connect to corporate resources over the public internet. This will provide a much needed layer of security to protect data.
Be aware of phishing attacks: Phishing attacks, specifically on corporate email, have dramatically increased. They typically use a disguised email as a weapon. Organizations must ensure that users know what to look for and be cautious about opening any attachments or clicking on links from unknown or suspicious senders.
Implement robust authentication: Multifactor or two-factor authentication are critical methods for remote work. As history has shown, passwords are one of the most heavily targeted entry points to any organization because users tend to recycle a set of common passwords. Only granting access to corporate resources after successfully providing two or more pieces of evidence to authenticate makes exploiting those logins much more difficult.

Long-term plans for business continuity

As a final note, be sure to proceed with caution even when the outbreak begins to subside and workforces return to the office. Cyber criminals are patient and stealthy, often establishing long-form attacks that allow them to fly under the radar for extended periods of time. “The first weeks back in the office are critical in making sure that an enterprise can keep operating,” Fischbach adds. “Look for any hints in security audit logs across the entire hybrid IT estate for possible attacks that might have been missed.”

Digital Watermarking Connects the Digital and Physical Retail Experiences

Tue, 28 Apr 2020 00:00:00 -0500

The 12-digit Universal Product Code (UPC) bar code continues to be a standard part of the retail experience. However, the information provided by UPCs — manufacturer and item number — is a fraction of what today’s consumers and supply chain partners are looking for. Fortunately, a new study shows that retailers are ready to move to the next level.

New technologies are putting data right at people’s fingertips and leading to heightened consumer expectations for product information. People want to instantly know an item’s ingredients or where its parts were sourced from, as well as the journey it took along the supply chain. They also expect a seamless checkout and returns experience.

A report from Digimarc, a provider of auto-identification and data capture solutions, notes that shoppers have become accustomed to “the endless shelf” of online shopping and now expect the same conveniences and product availability at brick-and-mortar stores. This is backed up by a survey from The Harris Poll, which found that 82% of shoppers get frustrated when items don’t scan properly and 86% say lines get backed up when cashiers have difficulty scanning.

Forward-thinking retailers and brand owners are finding new ways to streamline operations, improve accuracy at the point of sale, provide details about products, and reduce complexity for both shoppers and trading partners. One way they are doing this is with digital watermarking.

Make your (digital) mark

Digital watermarking is not new — it has been used in government security and banking for decades. But the science is now coming to the commercial marketplace. Digital watermarks can be printed all over a product’s packaging, yet are invisible to the eye. This is particularly useful for an item that has multiple bar codes.

The marks are read simply by pointing a scanner or smartphone in an item’s general direction — rather than having to hunt for a bar code. “The idea is to speed up supply chains and point-of-sale transactions,” writes Loretta Chao for The Wall Street Journal. “Companies will be drawn by the increased ability to control product information and other potential benefits.”

Chao adds that a detailed registration process is required for each item, which will enable users to ensure product information is consistent from origin to checkout, even if the item changes hands or is resold. Consumers can scan the product and immediately see the information registered by its brand owners and manufacturers.

“The need for more data is already evident on packages cluttered with proprietary bar codes to drive consumer engagement and enable more advanced use cases for retail, brand management and supply chain,” according to “Powering the Future of Retail,” a report by GS1 and VDC Research. “A single bar code symbology that contains all of this information, in addition to product identification, could provide benefits for every stakeholder along the supply chain. The newfound ease of capturing and sharing this data through a single interaction creates greater visibility and increases operational efficiencies.”

The report indicates a number of additional advantages from digital watermarking and related advances, which include

better inventory accuracy
seamless collaboration with trading partners
greater accuracy at point of sale
improved consumer engagement and opportunities for communication
enhanced customer experience by providing nutritional and sustainability information or interactive video
confirmation of product authenticity and reduce counterfeiting
traceability to safeguard consumers and execute faster and better product recalls
waste prevention by eliminating sell-by versus expiration date confusion
smoother returns
lower operating costs.

Change management

Barriers to widespread adoption will be affected by both cost and disruption to products and packaging. “Even those companies that adopt [digital watermarking] codes likely will use them alongside UPC codes for the foreseeable future,” Chao notes. “That is because many retailers, such as mom-and-pop grocery stores, would need to replace their hardware before use of the code can be more widespread.”

The GS1 and VDS Research report concurs: “The amount of change management required cannot be overstated: from the technology itself to associate and customer self-scanning training and competing priorities for capital investment in the face of rapid change. This is complex, important work that industry is undertaking.”

However, it seems like the biggest challenge will be lack of trust in data quality and partner integrity. The research urges brand owners and retailers to work together to bridge these gaps, strengthen their partnerships and better understand consumers.

Wilkie agrees, noting that widespread adoption will require substantial collaboration over several years. “There is no one single quick fix,” she says. “Industry stakeholders will need to focus on making sure that the data encoded is accurate and complete. While this transition is a serious undertaking with many moving parts, there is a majority agreement that we must change the status quo and make investments in our future.”

How to get started

Digimarc offers the following eight steps to ensure a successful launch:

Establish strategic objectives and key performance indicators to ensure maximum benefit for your business.
Identify all of the store media and artwork — private-label packaging, hangtags, labels, signage, displays, circulars and more — that you would like to enhance.
Define project scope, and identify all stakeholders essential for success. This includes brand suppliers, print suppliers and systems integrators.
Verify your retail scanners and retail scale environment and equipment is ready and enabled.
Assess your consumer and retail store mobile applications to ensure compatibility with your scanning engine.
Enable stores by adding the appropriate software to your devices.
Begin adding the technology to your identified media assets and artwork, in partnership with your production suppliers.
Train associates on the benefits of the tool.

“While the UPC bar code has served the retail industry well for 45 years, we need to consider the serious impact that technology and the consumer is having on the way we shop,” Wilkie says. “Consumers expect recalls to be more efficient, they want to know their food is fresh, they want to engage with the brands they love, and they want to check out and return items quickly. Winning consumer loyalty is enabled by providing more information and a seamless shopping experience.”

Prioritizing Ethical Business Practices in Times of Crisis

Fri, 24 Apr 2020 00:00:00 -0500

This past week, we celebrated Earth Day’s 50^th anniversary — and a very poignant one, as pollution levels plummet, waterways run clear, and wild animals reclaim parks and neighborhoods. The lockdowns triggered by COVID-19 have led to significantly reduced travel and shuttered industries, which — although at a tragic humanitarian cost — is nonetheless having a very positive effect on the planet.

These short-term gains are encouraging, but there is still a serious risk that the outbreak itself and the desire for rapid economic recovery will back-burner environmental concerns. “Climate talks have already been delayed and new policy initiatives postponed,” write Leslie Hook and Aleksandra Wisniewska for the Financial Times. “The convention center that was set to host the United Nations climate talks in Glasgow in November has been converted into a hospital for coronavirus patients. Governments and world leaders have attention for only one crisis right now.”

Still, many business leaders believe that the road to recovery offers a valuable opportunity to prioritize ethical practices. “The dawn of a new era of community and personal responsibility is upon us,” says Vanessa Barboni Hallik in Vogue. “As we take steps to recover and rebuild, we have an opportunity and obligation far greater than applying bandages to a flawed system.”

She cites recent headlines about canceled orders threatening impoverished garment workers in Bangladesh, at least one million of whom are estimated to have been fired or furloughed with no savings. Although the fashion industry has seen rising consumer consciousness and a greater appreciation for global citizenship, COVID-19 is underscoring the profound inequities that still exist in social and economic systems. Indeed, there is an irrefutable link between poverty and sustainability issues, with fashion being second only to technology for perpetuating modern slavery throughout its supply chains.

“The industry and our individual relationship with fashion has to change,” Hallik says. “If anything positive emerges from this crisis, it could be a timely reminder of our responsibility to each other and our planet, including, and perhaps foremost, those whom we touch with our everyday decisions and rarely meet.”

Forward-looking action

ASCM is proud to be joining forces with sustainability thought leader GreenBiz in order to explore and highlight the essential link between sustainability and supply chain. We will offer our expertise to advance the organization’s supply chain offerings while collaborating to create valuable content, events and networking opportunities.

In a recent GreenBiz article, author Kevin Moss urges supply chain professionals to really think about how we want to come out the other end of this outbreak. “The lens through which we are forced to take urgent action right now is the one business leaders can use to ensure the rush to resolve one emergency doesn’t accelerate the onset of another,” he writes. “Let this be the beginning, not the peak, of a corporate transformation journey.”

Moss says there are three ways to achieve this transformation:

Change business models to reflect what matters. Switch from selling more stuff to more people to providing services, reselling previously owned products and creating new kinds of jobs. “If ever there was a time to double down on the journey from a linear to a circular economy, it is now,” he says.
Emphasize social justice. The most vulnerable suffer disproportionately at times of crisis. By addressing inequality in their business models, companies demonstrate their commitment to health, safety and prosperity.
Invest in supply chains. Prioritize mapping value chains and assessing environmental risk. Having comprehensive and accurate data and engaging global suppliers will be essential.

Watch for details on our collaboration with GreenBiz in the coming weeks. And for more on supply chain’s critical role to play as we work toward recovery, be sure to visit our LinkedIn and YouTube channels on Tuesday to see SCM This Week.

Prepare Your Supply Chain for the Inevitable

Thu, 23 Apr 2020 00:00:00 -0500

Recessions happen about every nine years, and our global economy is due. As the coronavirus outbreak worsens globally, top analysts warn that recession is looming. Furthermore, U.S. economists point to two other indicators: an inverted yield curve (a negative comparison of 10-year and 2-year Treasury bonds) and precursors to monetary inflation, including low unemployment and rising wages. An August 2019 report by the National Association for Business Economics noted that 72% of economists surveyed believed that a recession is likely to occur by 2021. Likewise, The Wall Street Journal conducted a survey of private-sector economic forecasters, and more than 65% of those surveyed believed that the U.S. manufacturing industry is already there.

There isn’t much we can do to prevent recessions; they are a normal part of a functioning economy. How we prepare for that eventuality, however, is within our control. As explained by Bruce Arntzen and Nima Kazemi, researchers from the MIT Center for Transportation and Logistics, companies tend to become lax during the “good times” of a strong economy. The study, “Recession Readiness in Supply Chains,” compared business practices of 100 firms in 2007, 2009 and 2018 and found that organization leaders tend to stop worrying about a recession after a few years, letting best practices fall to the wayside. It is essential to take this seriously and shore up processes now so that an economic downturn doesn’t equal disaster.

HOW COMPANIES FAIL

During a booming economy, cash flows through a supply chain in several ways, explains Arntzen in an interview for MIT’s MicroMasters program. Money goes to the supplier, to the employees and to fixed business costs. It comes into the company from final customers. In such a scenario, everyone is happy.

When the stock market crashes, however, customers may instantly cancel new orders, try to withdraw existing ones and stop the flow of products into their business. They want to cease spending money immediately. But during a recession, cash is the most important asset a company can have. Without money coming in, that organization must turn to cash reserves. And if those are gone before the recession is over and spending begins again, survival is hopeless. According to a 2012 report by The Business Journals, more than 170,000 businesses closed between 2008 and 2010, during the Great Recession.

As previously noted, during periods of strong economic growth, companies often let their standards drop. Arntzen and Kazemi cite the following mistakes, which make it extremely difficult to prepare for a recession. They include

relying on “handshake” deals instead of contracts that clearly stipulate a business agreement
relaxing sales terms, including allowing invoices to stretch from 30 days to 45 or 60, thereby causing a lack of cash when it’s needed most
neglecting collections for payments owed
using exciting, high-tech materials or customized designs instead of standard materials in production
failing to conduct due diligence and check partner financial statements
bloating the workforce, buying or renting more warehouse space, or acquiring more facilities than necessary.

During the MIT graduate-level-course webinar, Arntzen also warned against allowing too many people in the organization to make purchases: “When the recession hits, everyone has the opinion, ‘Oh yeah, I know there’s a recession, but I just need to buy these extra few little things, and these few little things aren’t going to bring the company down. If you multiply that by everyone in the company, of course it brings the company down.”

START NOW

To avoid having to make a hasty pivot when the economy starts to falter, prepare now. Karin Bursa, executive vice president of marketing at supply chain planning and analysis solution provider Logility, says her customers who had a plan in place — and a playbook for its implementation — were the most likely to overcome a crisis. She recalls that, during the Great Recession, consumers saved money by switching from name-brand products to private labels. Of course, many private labels are produced by the same companies making the brand names. Bursa says smart decision-makers chose to make more private-label products, thus staying profitable, protecting their brand’s good name and giving cost-conscious consumers what they were looking for.

Bursa says the same concept holds true for the automotive industry: During a recession, consumers are more likely to delay purchasing new vehicles; so, manufacturers might choose to slow production of new cars and trucks and pivot to selling aftermarket parts and performing repairs.

Another important aspect of preparation is taking advantage of new technologies. The amount of consumer data available data in 2008 pales in comparison to what we have now. “Companies can leverage so much more data and gain so much more insight today,” Bursa says.

Businesses have access to more than just receipts and inventory; there are email lists, online search histories, social media connections and much more. Using artificial intelligence, automation and analysis software, supply chain organizations can effectively manage this influx of information — and use it to their benefit when preparing for an economic downturn.

In a 2018 report, Deloitte lists four steps companies should follow to prepare for the next recession:

Adopt technology and automation to leverage growth. Labor costs are going up while technology costs are going down — a perfect opportunity to restructure, elevate new and existing talent, and automate certain processes.
Build a “war chest.” As with the MIT study, Deloitte emphasizes how important cash is during a recession. The way to create that cashflow depends upon the business, but reassessing debt levels, making strategic investments and getting rid of underperforming assets are proven methods.
Embrace partnerships and find ways to combine related departments, including “overlapping supply chains and inventory management efforts, independent product development, and unconnected pricing analysis and markdown planning.”
Figure out why you matter. Consumers, retailers and wholesalers have a lot of opportunities to buy elsewhere. Give them a reason to choose your business. The researchers emphasize that you should be “crystal clear” on who you serve, how you serve them and why they should care.

Steve Minsky, CEO of risk-management solution provider LogicManager, asserts that a recession is a risk to prepare for, like any other. He suggests looking for personnel gaps and defining needed talent; identifying vulnerable customers; evaluating supply chain weaknesses, including issues with contracts, vendors and advisors; and reviewing potential security and privacy concerns.

“There’s a misconception that core business priorities, shifted by the recession, will bounce back after the recession is over,” Minsky writes in a blog post. “On the contrary, these priorities typically shift permanently as a result, which means preparing for this kind of change earlier rather than later will give you a sharp competitive edge.”

In an April 2019 audio interview for his company’s McKinsey Podcast, Senior Partner Sven Smit cites research findings on businesses that fared better during the Great Recession. The companies that survived the downturn — then thrived — had a few key things in common. First, they built the cash reserves mentioned previously. Second, they proactively cut operating costs, which the nonresilient companies postponed until after the crisis. “The resilient companies also worked hard at leverage, in particular through divestments. They got into a much better cash position that also allowed them to then invest in the future path. That was quite substantial.”

In other words, resilient companies act quickly, putting themselves in a stronger position almost immediately. Furthermore, they don’t lose their focus as the recession continues. This enables them to keep accruing gains while other businesses falter or fall behind.

According to consulting firm Bain & Company, warehouse club Costco made major financial gains in the last decade, despite the recession. Costco chose to restructure its stores to carry less variety of goods, shift the types of products on offer, and reduce storage costs by centralizing prescription centers and increasing its practice of cross-docking.

Costco also doubled down on the thing its customers care about most: discounts. The retailer followed consumers’ desire to switch to a high-quality store brand and invested in its private label, Kirkland Signature. According to Costco’s former CEO, Jim Sinegal, the mass appeal of those store-brand products and Costco’s low prices even led competitors, such as Procter & Gamble and Kraft, to lower their prices.

Bursa recalls a food and beverage client she worked with that survived and thrived not during a recession, but a similarly tricky period: an avian influenza outbreak. Continental Mills creates baking mixes, packaged goods and other food products. The bird flu affects chicken eggs as well as chickens themselves. Of course, eggs are a key ingredient in many baked goods. In order to avoid using potentially tainted product, Continental Mills acted quickly to find alternative sourcing. The company reformulated recipes to replace eggs with other ingredients that provide the same taste and texture. Company leaders also chose to narrow the product line, focusing on the most popular items to help them prioritize what was important to the customer.

“In just a few weeks, they would find a resolution for one of their key product groups, then begin working on another product group,” Bursa explains. “At the same time, they were reworking the production process.”

In the end, the company was able to reduce inventory obsolescence from $1 million per year to almost nothing, improve inventory turns by 20% and reduce forecast error in one division by close to 50%. That significant of a boost to a business’s bottom line — whether necessitated by natural disaster or recession — can make the difference in that company’s survival.

The ability to think and reformulate quickly isn’t possible without having a clear, documented strategy in place. As Bursa urges, “Don’t be caught without a plan and a playbook that forces your team to come together and think through the impact of each decision.”

Al Gore Talks Sustainable Business

Tue, 21 Apr 2020 00:00:00 -0500

Editor’s note: Al Gore is former vice president of the United States; founder and chairman of The Climate Reality Project; an independent director at Apple; and chairman of Generation Investment Management, an asset-management company incorporating sustainability values into the financial services world. He will join supply chain professionals from around the world in New Orleans, September 13-15, as the keynote speaker at ASCM CONNECT.

In 2007, Mr. Gore received the Nobel Peace Prize for informing the world of the dangers posed by climate change. An environmental, business and tech visionary, he is recognized as one of the world's leading activists and uniquely in touch with the opportunities and challenges associated with charting a new digital society. Time magazine called him “a businessman who is out to change the world.”

SCM Now Editor-in-Chief Elizabeth Rennie recently interviewed Mr. Gore about the digital revolution, corporate social responsibility in supply chains, key technological advances that can help organizations achieve sustainability goals, and more.

Rennie: You are known for being an environmental activist, but you are also a serial entrepreneur, founding companies such as Generation Investment Management, which is focused on another kind of sustainability — business sustainability. The ASCM Enterprise Certification is the industry’s first and only corporate supply chain designation that measures social responsibility, economic sustainability and ecological stewardship. What specific indicators do you recommend looking for when evaluating business sustainability?

Gore: I believe we are in the early stages of a global sustainability revolution, with the scale and impact of the industrial revolution, at the speed of the digital revolution. This revolution has the potential to reshape the world, transforming our relationship to businesses, to the environment and to each other.

As you noted, there's a range of criteria to define a sustainable company. A few important ones include the following:

Do its practices, products and services drive revenues, profitability and competitive positioning?
Does it avoid borrowing its current earnings from its future earnings?
Does it operate its business consistent with a low-carbon, equitable, safe and healthy society?
Does it not compromise returns, instead realizing the benefits and advantages of sustainable practices in its strategy?
And does it exhibit strong [environmental, social and corporate governance] factors, including diversity, worker happiness, et cetera?

Rennie: The networks that connect and enable these businesses are integral to their ability to be sustainable. What are some of the most promising ways you have seen this happening in recent years?

Gore: Companies are reinventing transportation through electric cars and buses and other forms of transportation; agriculture through more precise applications of inputs and alternatives to meat. Applying digital tools reduces energy consumption, better integrates renewable energy into electrical grids and retools workplaces for greater productivity. I see supply chain optimization as a critical pathway to better efficiency and, with it, fewer emissions and improved outputs.

Indeed, the drivers of economic change are not only integrally linked to sustainability factors, but will also continue to be increasingly dominated by them moving forward, ultimately driving investment returns. The entire spectrum of industry — ranging from mobility to food systems to the built environment — are being fundamentally reworked.

Rennie: In the pages of SCM Now magazine, we talk a lot about the power of procurement and recent fundamental shifts in expectations when it comes to corporate social responsibility. Whether you are a consumer buying the weekly groceries or a manufacturer selecting a tier 2 supplier, your choices send a message. In many ways, business leaders seem to be able to make more progress than political leaders. How can supply chain organizations propel upstream action through this type of engagement and transparency?

Gore: Supply chain organizations can develop stringent and achievable criteria for sustainability and emissions reductions, and then base business decisions off that criteria. They can choose to work only with organizations that are committed to solutions to the climate crisis and that have a business plan that accounts for the increasing strain that the crisis is putting on people and the planet’s resources.

Supply chain organizations can also encourage disclosure of [greenhouse gas] emissions that are responsible for warming our planet. Disclosure of emissions is critical to measuring and reducing emissions up and down any supply chain. It gives you better visibility into actions that suppliers are taking. And, perhaps above all, transparency always is critical to building trust across the value chain.

Rennie: Solar power and wind energy are fundamentally changing the marketplace and significantly reducing carbon emissions. In fact, according to the U.S. Bureau of Labor Statistics, the fastest-growing occupation is solar photovoltaic installer, followed closely by wind turbine service technician. What should supply chain organizations be doing to maximize the potential of these and other important advances?

Gore: It is true that the biggest source of new jobs is in solving the climate crisis. Over the past five years, solar jobs have grown five times faster than the economy as a whole. In addition to the growth you cited in solar and wind jobs, we can also create tens of millions of new jobs retrofitting buildings with LED light bulbs, better windows and better insulation — and those jobs would pay for themselves with lower heating and cooling bills in just a few years. Innovations in industry, including new business models based on the circular economy, are creating momentum in the private sector for a holistic rethinking of the way we do business.

Rennie: You are also a big advocate of regenerative farming. What can supply chain organizations do to highlight this opportunity for public policy makers, incentivize farmers and help the practice take hold?

Gore: I’m particularly excited about recent advances in regenerative farming, a new movement being led by farmers who are cultivating the land in a way that restores soil health and removes excess carbon from the atmosphere, thereby reducing the effects of the climate crisis. In fact, a recent analysis of nearly 64,000 acres of Midwestern farmland after the flooding in summer 2019 found that fields with more intensive conservation practices — like cover crops and reduced tillage — had a significantly higher success rate of plantings by improving water storage capacity in the soil.

Supply chain organizations can help advance these solutions by sending a clear message to the marketplace that sustainability and efficiency are required for business. That will incent potential partners to build clean energy technologies into their businesses. Additionally, I encourage all organizations to push for local, state and federal policies that reduce greenhouse gas emissions and that support renewable energy development.

Rennie: What did it mean to you to receive the Nobel Peace Prize for informing the world of the dangers posed by climate change — and more importantly, how have you used that honor to amplify your message?

Gore: Receiving the Nobel Peace Prize was especially significant for me because I had the honor of sharing it with the [Intergovernmental Panel on Climate Change], the world’s preeminent body of improving our understanding of the climate crisis. It also had a big impact on my ability to reach a broader set of audiences and recruit more people around the world to join humanity’s urgent imperative to help solve the climate crisis. For that, I am forever grateful.

Rennie: If you were still in government, what would be the top three items on your to-do list?

Gore: First and foremost, we are long overdue in ending the taxpayer-funded subsidies for coal and other fossil fuels. We need to reform our subsidies system away from bad practices and toward good ones, with flexibility to implement sustainable practices that make sense for each industry and region.

We also need to put a price on carbon. Every day, we spew 152 million tons of global warming pollution into the atmosphere as if it were an open sewer. For too long, industry polluters have been able to pour these dangerous emissions into our atmosphere without any consequence or any accounting of the impact on our health and well-being.

And we must develop policies that account for those disproportionately affected by pollution in minority and low-income communities across America. The statistics underscoring the disproportionate impact on these vulnerable populations should anger every American. Any policy that’s put in place, but especially any that address environmental protection, must also address equity and protection of frontline communities.

Former Vice President Al Gore will present his keynote speech at ASCM CONNECT, September 13-15, in New Orleans. Attend the leading supply chain conference, designed to connect you with the global supply chain community, industry best practices, new ways of thinking, and endless ways to advance your organization and career. Visit ascm.org/conference to learn more and register today.

Repairing the Disconnects in Our Food Supply Chain

Fri, 17 Apr 2020 00:00:00 -0500

As food banks struggle to meet demand and grocery stores shelves sit empty, farmers around the world are watching their produce rot, flooding thousands of gallons of milk down the drain, and breaking eggs rather than allowing chicks to hatch.

About half of all food produced is ordinarily destined for now dormant restaurants, school cafeterias, hotels, stadiums, theme parks and cruise ships. As the COVID-19 era transforms the way people eat, the effect of this massive shift is a distressing imbalance in the food supply chain.

“The supply itself is not in question, but matching that supply with demand and getting it to where it’s needed most is a new and urgent problem,” writes Susie Cagle for The Guardian.

In recent years, consumers have become much more mindful of where their food comes from and how it’s produced. Although many companies have been boosting their transparency efforts in response, the pandemic is underscoring many lingering gaps. Efforts to find, produce, track and reroute inventories of urgently needed goods are proving to be seriously impaired by this lack of visibility.

Adding to the predicament is that preparing, packaging and shipping food for a theme park or hotel is very different from a food bank or grocery store. This is largely because of variations in packaging, sizes and labels. For example, a butter maker might have to convert from small, single-serve packets to sticks; or a poultry producer that doesn’t have enough workers to portion chickens may begin selling whole birds.

Likewise, redirecting industrial-scale goods “involves more than a phone call or quick email exchange,” Jennifer Smith notes in The Wall Street Journal. I spoke with Smith earlier this week and explained that resolving the discrepancies between industrial and consumer food supply will require significant investment in transparency and visibility, in addition to the associated production, warehousing and logistics costs.

At the same time, the increasing number of farm, processing plant, warehouse, logistics and grocery store workers becoming sick with coronavirus is further intensifying the problem. The outbreak at Smithfield Foods, for example, has affected 230 workers — more than half of the cases in the entire state of South Dakota. “Employees often work shoulder to shoulder, and some companies have granted sick leave only to employees who test positive for the coronavirus,” Michael Corkery and David Yaffe-Bellany write in The New York Times. “That potentially leaves on the job thousands of other infected workers who haven’t been tested.”

Karan Girotra, a supply chain expert at Cornell University warned the Times: “Labor is going to be the biggest thing that can break. If large numbers of people start getting sick in rural America, all bets are off.”

The tools you need to make an impact

The unfortunate reality is that our current food supply chains are not equipped, aligned or well-positioned enough to make critical modifications. But ASCM is working to address these challenges with essential education, training, resources and coronavirus content that is continually updated. We are collaborating daily with subject matter experts to develop relevant information on our COVID-19 Resources webpage, and numerous free webinars are being produced, including The Coronavirus Impact on Global Supply Chains, Planning Through Unimaginable Times and Doubling Down on Supply Chain Digital Capabilities.

Finally, be sure to visit ASCM’s LinkedIn and YouTube channels to see my weekly video chat, SCM This Week, with SCM Now Editor-in-Chief Elizabeth Rennie. This Tuesday, she and I will delve deeper into the future of our food supply chains and how supply chain professionals like you can make a difference.

Coronavirus Escalates to Recession, but Swift Recovery Is Achievable

Fri, 10 Apr 2020 00:00:00 -0500

This is the first time in modern history that we have experienced a global recession that was triggered by a public health crisis. “The economic impact is and will be severe, but the faster the virus stops, the quicker and stronger the recovery will be,” says International Monetary Fund Managing Director Kristalina Georgieva. She adds that, in order to recover in 2021, countries must prioritize containment and strengthening health systems.

Jay Shambaugh of The Brookings Institute agrees, noting: “While there are always problems in any economy, there was nothing fundamentally wrong in the economy that triggered this recession — no asset bubble popping or runaway inflation to be stopped. The shock is from outside the economy, and if the health shock can be controlled, good policy may be able to steer to a quick return.”

The keys to that return will be limiting the damage as much as possible and taking next steps as soon as safety measures permit activity to be resumed. To that end, James daSilva of SmartBrief offers the following no-nonsense advice for supply chain organizations adapting to an upside-down world, those facing near-term revenue reduction, and even those “barely hanging on”:

Spend time and money on talent and training. And do not lose great people, he warns.
How you market and sell needs to change. Now is the time to be visible. Check in with your partners and other stakeholders, and think about how you can help them, rather than sell to them.
If you need to make cuts, try reduced hours, furloughs and pay reductions first. This keeps people from fleeing and ensures you have the organizational and structural capacity for recovery.
Values and behavior still matter. “A values-based culture modeled by leaders remains a strength, especially during a time when your employees will be distracted and disrupted,” daSilva explains.
Be clear, show a path forward, and don’t pretend everything’s great. Clarity and specificity will help you create an effective plan for mitigating and overcoming the crisis.

Realizing recovery

“There isn’t much we can do to prevent recessions; they are a normal part of a functioning economy,” writes Holly Poulos in the brand new issue of SCM Now magazine. “How we prepare for that eventuality, however, is within our control.”

Learning from the experience of others is one solid strategy to keep moving forward. Poulos’s feature article, “Prepare Your Supply Chain for the Inevitable,” details stories of resilient companies from the automotive, food and beverage, and retail sectors that survived and thrived during the Great Recession and other crises. SCM Now also includes articles that explore how digital tools can help your organization compete under challenging circumstances and techniques to alleviate pressure during stressful times.

Our world is, indeed, upside down. But with the right strategies and mindset, we can achieve an equilibrium again. Start by reading the award-winning SCM Now magazine.

Cut Through the Hype to Enable Your Digital Supply Chain

Thu, 09 Apr 2020 00:00:00 -0500

In the age of COVID-19, building advanced supply chain capabilities is more important than ever. Customer requirements, corporate goals, market dynamics and available data are changing rapidly, and all can have a significant impact on best practices, talent and agility — especially in turbulent times. To be successful at developing your supply chain of the future, the four foundational dimensions of people, process, data and technology must be addressed simultaneously. Here’s how.

Optimization, algorithmic planning, advanced analytics, artificial intelligence, and machine and deep learning are terms used daily in conjunction with supply chain operations. But how do you know what might be beneficial to your company’s supply chain operations? And how do you start the journey to acquire and master advanced supply chain planning capabilities?

Strategically focused organizations with advanced supply chain planning and optimization capabilities are leading the charge toward digitally enabled operations. They did not become leaders overnight; rather, their journey to a digitally optimized supply chain was built systematically over time while developing the capability to quickly sense changes in the end-to-end supply chain and proactively respond with optimal decisions.

The first step is building a team to support your digital supply chain. Advanced digitally enabled capabilities add value; a strong team that can maximize these capabilities takes you to the next level. As you build your team, make sure to ask these questions:

Who should lead the effort to digitize your supply chain?
What skills does this leader need?
How do you define the roles to enable a digital process and culture (for example, supply chain analyst, database engineers, data scientists, etc.)?
Do you have the required skills available within the company, or will you need to look externally?
How should the team be organized to efficiently run the business while driving innovation?

Step back and determine if your organization can successfully meet current operational objectives at the same time you develop enhanced capabilities for the future. Often, establishing a supply chain center of excellence can help build the necessary skill sets and capabilities.

Next, rethink current processes to gain benefits from digital capabilities. Digitization involves gaining visibility and access to operational data across the extended supply chain. However, the way you use this data to solve problems and enable new capabilities is where real value is created. Be prepared to explore and discover how to maximize the benefits by solving existing problems and tackling new opportunities.

Make sure you have the right data. The volume of data is growing exponentially, and the majority of this information resides within business domains. To develop meaningful insights, supply chain data needs to be clean, consistent, comprehensive and current. Too often, the available data is difficult to analyze because it is split between multiple reporting tools and systems — or it’s simply bad data. Achieving robust supply chain data management capabilities requires

the establishment of organizational roles and business processes that continuously drive supply chain data management excellence
technology that supports key supply chain data management business processes
ownership of the process, data and technology by the supply chain organization.

The final foundational component to enabling your digital supply chain of the future is a strong technology platform. To accommodate the fast-paced, 24x7x365 supply chains of today, the platform should support rapid deployments, flexible user interfaces, agile process adjustments and scalability. It also should automate and streamline data management to facilitate structured and unstructured data acquisition, cleansing, management and visibility across the extended supply chain. Look for multi-horizon, multi-aggregation, multi-functional, multi-organization, multi-unit and multi-language operations. Additionally, advanced numerical and visual analytics support real-time analysis and best-practice adoption to enable robust planning and optimization capabilities from product design to customer availability. Finally, advanced supply chain systems should provide embedded and purpose-built artificial intelligence to automate the routine and augment advanced analysis and decision making.

3 Steps to Tracking COVID-19 Supply Chain Damage

Wed, 08 Apr 2020 00:00:00 -0500

It’s no exaggeration to say that the current pandemic is posing an unprecedented challenge to supply chain resilience. Broadly speaking, that disruption matters little compared to the continued loss of life; still, for businesses — especially those without significant resources — it matters.

In normal times, most CEOs don’t ask too many questions of their procurement specialists. Now, they are scrambling to find out every detail about their supply chain and how vulnerable it is. Our preliminary data suggests that companies may shift to partner with companies in countries seen as less affected by the outbreak. In fact, the number of due diligence inquiries in China by our clients dropped to 35% in the first quarter to date, compared to 53% a year ago; Mexico and Turkey are showing significant increases. This data isn’t comprehensive and doesn’t capture what’s going on inside of most companies, where executives are struggling to get more granular information from a siloed division that usually doesn’t have to offer it.

Ideally, supply chain contingency plans and processes for this type of extreme scenario will have been put in place years ago. For those that haven’t, here are three steps you can take now to protect your supply chains and minimize disruption to your business.

Assess. Before making any decisions, it’s vital to make an accurate and comprehensive assessment of your supply chain and its vulnerabilities. That doesn’t just mean checking up on your immediate suppliers; you also need to assess potential vulnerabilities further down the supply chain. Companies often have a pretty vague idea of who’s supplying their critical suppliers and don’t drill down beyond the first layer. At times like this, it pays to have in-depth talks with your suppliers to understand their own stress points and how you may be able to work together to ease them. It’s an opportunity to make sure your suppliers are being transparent with you and to understand that burying their heads in the sand is not an acceptable strategy.
Be systematic. A holistic, systematic process is necessary to cope with supply chain disruptions on this scale. Procurement departments may be used to put out the occasional fire, but the nature of this crisis is more like an inferno consuming the whole forest. While the big players tend to have strong systems in place, midsized firms often are heavily manual and relatively unsophisticated processes. They might email their critical suppliers with some questions, but that’s a scatter-shot approach that falls short of providing the full picture or an assessment of risks over time, especially if you’re dealing with thousands of relationships. The extent and nature of the coronavirus impact is changing by the day and needs to be assessed accordingly, analyzing the outlook over different time periods.

Ask lots of questions. Ask your suppliers a series of pointed, detailed questions that elicit clear responses backed by evidence. Send them a questionnaire that digs deep into potential vulnerabilities. Investigate their lag time, inventory, staffing contingency plans and current production capacity. Ask if their suppliers have missed any deliveries. Find out what may change in the next 30, 60 and 90 days. Most likely, they’re as concerned as you are and will welcome the chance to have a frank discussion. Plus, starting this dialogue opens the door to a more transparent relationship in the future — a meaningful advantage.

Business Continuity in a Pandemic: Safeguard Your People and Partners

Tue, 07 Apr 2020 00:00:00 -0500

Organizations worldwide have been reacting to the COVID-19 outbreak in many ways. Public health, appropriately, is the first priority right now. But the health of businesses and the global economy are also essential to public welfare. Thus, it is urgent that organizations review and update their business continuity plans and procedures to ensure operational resiliency.

The most valuable asset of any business is a healthy and available workforce. The pandemic has already resulted in a largescale move by organizations toward working from home in order to practice recommended social distancing. This is a major disruption to normal operations, but many companies were at least partially prepared and are already functioning with remote workforces.

As you protect your workforce and help ensure its continued productivity, it is important that you

establish a strategy that enables employees to continue to function without endangering them
have a plan to isolate your employees should the threat of possible infection arise
ensure your employees can effectively work from home
verify that you have the tools, technology, capacity and security measures in place to support a large, remote workforce
review your human resources policies to ensure employees will not be personally affected if they must be quarantined for an extended period
modify any policies as necessary to give greater flexibility to normal working arrangements
determine your priorities and minimum staffing requirements to support these, in case you need to function with a significantly reduced workforce
identify key employees and ensure other staff members have received appropriate training to comprehensively cover their absence
create a communications plan that includes providing regular updates, along with actions taken, to employees and other key stakeholders.

In a global economy, virtually every organization is connected to, or dependent on, another. You may not be directly affected by the pandemic, but a vendor at a critical point in your supply chain probably is. Understanding your dependence on entities outside your organization is critical. Are your critical third parties (suppliers, vendors, service providers) prepared?

To protect your operations and ensure continuity of services, it is important that you

map your dependencies to understand where disruptions might affect your value chains
review the preparedness of your critical third parties
identify single points of failure in your ecosystem.

When assessing the impact of a disruption, it’s important to recognize the amount of time before the actual impact occurs. So, as you review and update plans, conduct walkthroughs and exercises. This is the best method for identifying gaps, and it will give you the highest chance of success. Active participants will become familiar with the goals and objectives of the plan and begin to use it as guidance rather than a prescriptive list of tasks to be followed without applying rational thought. Practicing the execution of your plan ensures all parties understand their roles and responsibilities.

During your preparedness reviews, assess the tools used to maintain relevant information and execute plans. Old technologies and obsolete tools threaten even the best plans. Identify any deficiencies in the tools you have available, and create a comprehensive list of requirements. The sooner you begin to upgrade your tool set, the sooner you will be able to reduce your risk.

Communicate, maintain situational awareness, and provide current and accurate information. Your organization’s ability to respond to disruption hinges on the effectiveness of your planning, your tools and the training of your people.

A 5-Step Guide to Keeping Your Supply Chain Moving During the COVID-19 Crisis

Mon, 06 Apr 2020 00:00:00 -0500

In this time of unprecedented uncertainty and chaos, organizations are determined to keep their supply chains operational, which means navigating major shipping delays, panic-buying and factory closures. Here are five steps supply management professionals can take to protect their supply chains.

Step 1: Keep your team safe. As governments around the world execute increasingly draconian measures to keep their citizens inside, there’s simply no excuse for employers to not prioritize the safety of their teams. Anyone that possibly can, should be working at home. Travel must be restricted to the absolute minimum. Take extra health and safety precautions in the workplace to best protect those who do have to come in. This could include segregating employees, more frequent and thorough cleaning, or introducing a rota to control the number of people being in the office at any one time. Enable a smooth transition to remote working with collaborative platforms such as Monday.com or Slack.

Step 2: Set up a disaster response team. Supply chain management has always been a profession that thrives on collaboration and innovation. Now, more than ever, it’s important to harness the collective brainpower of your organization to respond and adapt to today’s ever-changing landscape. Supply chain professionals need to establish and lead a disaster response team, which that reports directly to the C-suite, to discuss crucial factors affecting the supply chain and what to do about it. The team should be an agile, cross-functional, decision-making command center.

Step 3: Know your weak spots and implement contingency strategies. Manufacturers in China are currently operating with 56% of their normal staffing numbers at 50% capacity, although there are signs that the Chinese economy will be the first to recover. As a result, lead times are increasing to almost double their 2019 average and organizations face the prospect of losing some critical suppliers altogether. To mitigate this risk, identify both the most critical and most at-risk links in your supply chain — particularly where products or services are procured from a single-source supplier. Identify new suppliers in alternate locations, at least for the coming months. Note: Before selecting a new vendor, clarify if you would be in breach of an existing contract if you moved. If you do sever ties with an existing supplier, be sure to recover any assets from them such as stock, materials or equipment.

Step 4: Conduct ongoing and thorough risk analyses. The scale and impact of COVID-19 is changing incrementally. This demands ongoing, close monitoring of your supply chain. Stay one step ahead of the next major border closure or city lockdown. Ignoring the early warning signs could be the difference between keeping your organization afloat or not. If your suppliers have requested changes to payment terms, have failed to deliver a service or product on time, are no longer communicating with you openly, or your market intelligence has informed you of a growing crisis in a particular area, now is the time to act. Be sure to forecast the financial impact of different contingencies to understand the long-term consequences of the choices your business makes today.

Step 5: Plan for the future. COVID-19 has given organizations around the world a stark reminder that their existing risk-mitigation strategies are not enough. While this is absolutely a time for agile responsiveness, it’s also an opportunity to take stock and make changes for the future. Consider the benefits of evolving your supply chain to a more fluid, diversified model, driven by factors including cost, demand, production and the likelihood of black-swan events. Digitization and technology have a key role to play: Automation, blockchain and 3D manufacturing can accelerate response time and drive supply chain efficiencies.

In closing, be realistic. Every organization is going to suffer financial and supply chain impacts from the COVID-19 epidemic. Attempting to maintain a business-as-usual supply chain is impractical and will only lead to burnout. Instead, focus on meeting critical business needs and maintaining supplier relationships.

Supply Chain Mapping — an Essential Step Toward Resilience

Fri, 03 Apr 2020 00:00:00 -0500

As the global economy tackles the ongoing COVID-19 pandemic, a whopping 70% of companies are still grappling with information-gathering and evaluation. These businesses are attempting to manually identify which of their suppliers have a site in a locked-down region, secure raw materials and components, and protect their network from further disruption. With essential data absent or unobtainable, response to the outbreak is reactive and unsynchronized, making the impact even worse.

However, those supply chain organizations that had the foresight to map their networks before the crisis emerged have much better visibility into what is really going on with their supply chains. “Instead of scrambling at the last minute, they have a lot of information at their fingertips,” write Thomas Choi, Dale Rogers and Bindiya Vakil for the Harvard Business Review (HBR) . “They know exactly which suppliers, sites, parts and products are at risk, which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites.”

The APICS Dictionary explains that supply chain mapping is “drawing the procedures or relationships that form an organization’s business process.” The best maps are as revealing as possible. They depict the geographical location of suppliers; supplier’s suppliers, all the way down to raw materials; manufacturing plants; warehouses and distribution centers; transportation routes; and major markets. They include information on activities performed at each site, alternative sites that can do the same, lead times, shipment frequencies, product mix and volumes, supplier delivery performance, and more. Many organizations also choose to incorporate disruption-related metrics in their supplier evaluations; some even require suppliers to participate in annual mapping efforts.

“Supply network mapping can be resource-intensive and difficult. However, there is no way around it,” the HBR article continues. “Companies will discover the value of the map is greater than the cost and time to develop it.”

Preparing for the unthinkable

ASCM continues to closely monitor the situation related to the spread of the coronavirus. Our team is constantly gathering resources and creating content to help you and your organization navigate this crisis, respond and prepare for the future.

On April 9, ASCM will present Planning Through Unimaginable Times, featuring Brian David Johnson, futurist in residence at Arizona State University, and Anthony Zampello, CPIM, CIRM, CSCP, an adjunct faculty member at Bentley University. I invite you to join them for a discussion about today’s most innovative risk-management strategies; the importance of international coordination, collaboration and information-sharing; methods for assessing your major sources of vulnerability; devising creative plans for the future; and much more. Register today for this insightful webinar.

Understand the Future of Retail

Thu, 02 Apr 2020 00:00:00 -0500

In the early days of the COVID-19 crisis, before the World Health Organization called the disease caused by the novel coronavirus a pandemic, the first effects many seemed to notice were about consumer purchasing: People were stockpiling toilet paper and beans. The latter is a logical pantry staple if you’re planning to cook more at home. Toilet paper, on the other hand, was one of the first indications that consumers weren’t just preparing for a potential illness: They were panic buying. Consumers were worried about a sudden lack of resources.

Logically, we all know that COVID-19 doesn’t create an increased need for toilet paper; it’s a respiratory disease. Consequently, as toilet paper — along with household staples that do mitigate the spread of illness, such as paper towels, hand sanitizer and acetaminophen — began disappearing from store shelves, other shoppers began purchasing them too. They feared supply would be completely gone by the time they needed it.

In the ABI Research whitepaper “Taking Stock of COVID-19,” the authors note, “Both manufacturers and retailers need to develop prioritization plans for customers, potentially with set limits.”

Ananth Iyer, professor of supply chain management and senior associate dean at Purdue University’s Krannert School of Management, agrees that setting purchasing limits is an effective strategy. He suggests the following tips for combating the effects of panic buying:

Stop classifying customers as irrational; they’re making rational decisions based on the information they have and the store shelves they’re seeing.
Demand is increasing dramatically, but meet those demands anyway. Customer use might be increasing due to our recent lifestyle shift, not just a matter of stockpiling.
Assure customers that stock is available in the supply chain. Offer rain checks if a wanted item is out of stock. This will reassure customers that their product will be on the next shipment.
Shift to private labels if they’re more readily available. Having a less-desired brand on the shelf is better than having no inventory at all. Again, customers are less likely to overbuy if they see inventory available.
Commit to fair prices. Panic buying is often due to a fear of price-gouging. If retailers keep their prices steady, the customer has less reason to buy all the stock at one time.

Other experts have noted that consumer habits are contributing to short-term supply disruptions. Therefore, getting goods and food to stores as quickly as consumers are purchasing them is the first logistical problem.

A story in the Wall Street Journal outlines how food manufacturers are trying to expedite the process of getting their products from the manufacturer directly to the grocery stores’ storage centers, instead of stocking their own warehouses first, cutting down the time in transit. And retailers are ignoring years of data tracking customer purchasing habits and buying as much as they can, based on how much the manufacturer can produce and how many of their customers are now requesting the products. The just-in-time model grocery stores had practiced for years is no longer viable.

Undoubtedly, the increase in sales requires an increase in workers to meet that demand. Amazon announced in a blog post on March 16 that it was working quickly to meet increased customer demand. “We are opening 100,000 new full- and part-time positions across the U.S. in our fulfillment centers and delivery network to meet the surge in demand from people relying on Amazon’s service during this stressful time, particularly those most vulnerable to being out in public.”

Today, while the coronavirus has spread to hundreds of thousands of people, there are still individuals available to fill these roles, especially as restaurants, bars and other nonessential businesses are forced to close. However, if the virus reaches millions of people, and more are forced to shelter in place or even stay in quarantine in their homes, they will need an alternative to visiting the local grocery store.

A McKinsey report, advising businesses on how to adjust customer engagement in the time of the coronavirus pandemic, describes the increased need for e-commerce. “People have dramatically shifted toward online shopping and ordering for all types of goods, including for food and produce delivery. Companies should invest more in online channels as part of their push for multichannel distribution. The investment should include ensuring the quality and delivery of goods sold online.”

A March 21 letter from Amazon CEO Jeff Bezos said, “We’ve changed our logistics, transportation, supply chain, purchasing, and third-party seller processes to prioritize stocking and delivering essential items like household staples, sanitizers, baby formula, and medical supplies.”

Iyer suggests that small businesses, looking to compete with the big box stores, should consider their personal knowledge of their customers as an asset. They have a greater understanding of the customer’s intent, he says, and can stock their stores accordingly.

The McKinsey report also reminds businesses that, after the crisis is over, many consumers will not return to their pre-outbreak spending habits. For one, the economy will be a very different place, regardless of whether the stock market fully recovers. Many small businesses, forced to close for public health concerns, are likely to fold. Thousands of workers have been laid off and furloughed; even if the unemployment rate quickly drops again, service-sector workers may be more skittish about spending.

Secondly, depending on how long the period of self-isolation lasts — some epidemiologists are predicting 18 months of repeated periods of quarantine until a vaccine for COVID-19 is found — individual habits may change. Online shopping was already prevalent before the crisis; those shoppers who were still regularly visiting local stores may get used to buying their groceries, personal care products and medications online. Consequently, companies that have yet to invest in a mobile shopping app or a streamlined online purchasing experience should do so now.

In the ABI Research report, businesses are reminded, “To effect change, there must be stimulation of a magnitude that means companies cannot do anything but make bold decisions to survive.” As is clear from Amazon’s recent decisions, the major players in the economy are already quickly pivoting to meet current demands; now is the time for local and national organizations and supply chains to do the same, if there is any hope of weathering this crisis with the business intact.

In a webinar hosted by DHL and the Retail Industry Leaders Association, experts David Shillingford and Shehrina Kamal discuss how these consumer actions are affecting the supply chain today and will shape it going forward. They suggest that all the preventive and reactive measures retailers take now, including a move to online commerce, will be useful during future supply disruptions, such as hurricanes. It’s also a great lesson on the power of agility.

The main thing to keep in mind, however, is the health of the public, says Iyer. “Insufficient stock should be the least of any consumer’s worries, because we have an agile and efficient grocery supply chain that has fierce competition in most locations. This means that the entire supply chain is eager to satisfy demand, and it will flex to do so. Consumers should feel confident, and retailers have the opportunity to build goodwill by being partners in helping consumers deal with their needs.”

Surviving COVID-19 Through Digital Transformation

Wed, 01 Apr 2020 00:00:00 -0500

Supply chain disruptions, like the one we are currently experiencing due to the COVID-19 pandemic, will continue to happen. Just think about the last few years: a major fire in China; a devastating earthquake and tsunami in Japan; a volcanic eruption in northern Europe; several large hurricanes in the southern United States; an ocean carrier going bankrupt, stranding thousands of shipping containers; trade wars between just about every country; withdrawal or significant changes in trade agreements such as Brexit; and, to top it off, a pandemic that has kicked off the latest global recession.

I’m sure I missed a few, but my point is clear: Our global, complex, fast-paced supply chains can be disrupted in hundreds of ways, and that’s not changing anytime soon.

Transaction-focused enterprise resources planning (ERP) does not provide the capabilities needed to efficiently and effectively respond to major disruptions. ERP systems do a great job managing transactional data, but they do not provide early warnings to disruption or analysis through advanced analytics such as simulations and what-if scenarios.

Surviving major supply chain disruptions requires advanced planning and optimization platforms that enable supply chain organizations to prepare for the unexpected. Artificial intelligence (AI)-enabled, purpose-built capabilities can simulate the effects of disruptions to and end-to-end supply chain, highlight ways to mitigate these effects, and develop action plans to be quickly deployed. These platforms use end-to-end digital supply chain data and machine learning intelligence to quickly sense changes, alert users, suggest the best responses, and act. They strengthen decision-making capabilities by providing data and analysis during high-pressure situations.

Supply chain data

Of course, end-to-end visibility and automation/augmentation through advanced analytics and cognitive engines first and foremost requires comprehensive, clean, consistent and current master and transactional supply chain data. Once available, the platforms can serve it up in near-real time, in the format needed to support planning and optimization processes. To understand the size of the opportunity, just imagine how much data could be stored on 200 Million DVDs. That is the amount being created every day, and a good portion of it would be very useful in sensing and responding to supply chain disruptions — if you had access to it.

Supply chain agility

Another foundational capability is supply chain agility. Agility allows a supply chain to quickly respond to opportunities and disruptions in a profitable way. Supply chain agility is gained through capabilities that enable rapid identification of changes, fast decision-making, and optimal responses that maximize company benefits. Agility can be maximized by leveraging both human and technology capabilities. Humans excel at solving problems that require common sense; generalization; creativity; and dealing with ethical dilemmas, subjective actions and abstraction. Cognitive systems excel at locating knowledge, developing an optimal solution, eliminating bias, compressing process times and dealing with repetitive decisions. An agile supply chain can quickly launch new products, divert products from one destination to another, and respond to opportunities and disruptions.

Speed

Finally, in today’s “instant everything” business environment, a capability essential to surviving supply chain disruptions is speed: speed to identify the disruption, to analyze available data and come up with the best response, and to execute the required actions. Automation unlocks speed because it provides critical updates, trend changes, alerts, and decision-making and action execution. AI-powered platforms can automate the routine and augment a human’s innate common sense, creativity and subjective judgment abilities to make better choices faster. The time from disruption to optimal response can be reduced by a factor of 10 through automation and augmentation. Just think what that time compression could allow your company to do and how much value that could create by

changing purchasing and manufacturing plans days or weeks sooner
diverting inventory on the fly
locking up alternative supplier capacity before competitors even now about a disruption
taking critical cash flow and other financial actions to minimize business impact.

Key questions to ask

Finally, surviving the COVID-19 pandemic will push many supply chains, and the people who manage them, to their limits. Ask the following questions to jump-start your team discussions:

Do we have access to comprehensive, clean, consistent and current supply chain data from our supplier’s supply to our customer’s consumer?
Do we have a plan for adopting advanced analytics, AI and machine learning in our supply chain operations?
Do we have the ability to run multiple what-if scenarios to analyze how our supply chain will be affected by different types of disruptions?
Can we develop mitigation plans for scenarios that are most likely to occur?
Can we quickly sense a disruption in our extended supply chain, analyze options to mitigate it and execute the best response?

If you answer “no” — or even “maybe” — to any of these questions, it’s time to get serious about exploring and implementing digital supply chain transformation for a better, more intuitive future.

“Business as Unusual” — Global Health Supply Chain Leader Eliud Muriithi Shares Insights About the Coronavirus Pandemic

Mon, 30 Mar 2020 00:00:00 -0500

Editor’s note: Eliud Muriithi is director of commercial services at Kenya Medical Supplies Authority (KEMSA). KEMSA is a state corporation under the Ministry of Health whose mandate is to procure, warehouse, and distribute drugs and medical supplies. These supplies are provided for prescribed public health programs, the national strategic stock reserve, prescribed essential health packages and national referral hospitals. KEMSA also supports county governments in establishing and maintaining appropriate supply chain systems for drugs and medical supplies to health institutions.

Rennie: Most societies are not ready for a fast-moving pandemic like COVID-19, particularly vulnerable populations who are disproportionately at risk. What is your organization doing to ensure that these people — the homeless, the elderly, those living in multi-generational households — are identified and supported?

Muriithi: KEMSA is a public entity that supports the Government of Kenya in managing public supply chain on behalf of the Minister of Health. If I may start by what the Government of Kenya has done —the president himself has taken up the mantle by assuring that he appoints a national response committee on coronavirus. This committee, which is charged with the responsibility of coordinating interventions, were able to set up a National Response Center within seven days of establishment.

KEMSA also works closely with the Ministry of Health and other stakeholders to identify health products and technologies that are required in response to the coronavirus. HPTs, or health products and technology, have been identified; notifications have been made; and HPTs have been sourced from different suppliers, some of them internationally.

Rennie: The director general of the World Health Organization is asking for global unity to change the course of this pandemic. So far, this kind of solidarity has been lacking. Have you experienced any challenges in this regard?

Muriithi: We have had issues to do with importation of HPTs from different countries. Some of the countries have said, “No more export of HPTs,” because they want to address their internal needs first. We responded to our internal suppliers and ensured that we mobilized the necessary supplies required, especially in regard to infection prevention and control products — personal protective equipment (PPEs), such as masks, coveralls and goggles.

Rennie: What is your health supply chain doing to adopt a more unified, collaborative path forward in Kenya?

Muriithi: The president, as I mentioned, has put everybody in a gear where everybody thinks about the nation first; everybody thinks about the people of Kenya first. We are not thinking about ourselves, and that includes the private sector. Most important, all stakeholders are working in unison to ensure that everybody's contribution is recognized. We are not here to capitalize or make a profit, but to ensure that services are rendered.

The president called us to action, and we have been meeting as government officers. The private sector has been sitting down with us, as well, to ensure that everybody brings on board what they are able to. Those are some of the common fronts that are being done by different people to ensure that we are facing the pandemic not as individuals, but as a country.

KEMSA has mobilized the different suppliers of COVID-19 products and trying to communicate to them that here we are not doing business as usual; we are doing business as unusual for the common good of Kenyans.

Rennie: If the pandemic has a silver lining, it may be that it offers health care professionals from around the world opportunities to embrace creativity, collaboration, identification of weaknesses, and ensuring we are better prepared in the future. What is your health care supply chain doing to maximize these opportunities?

Muriithi: COVID-19 has given us an opportunity to relook at our health systems — not just ourselves, but the entire public health supply chain system — and ensure that we are able to respond to any pandemic or epidemic that arises. In essence, it’s relooking at the entire health spectrum: looking at health financing, looking at issues to do with human resources for health, looking at health supply chain issues. It is a 360-degree relook at our health systems.

Over and above COVID-19, there will be other issues arising in the future. This is a wake-up call for the world to rethink our manufacturing. I think we over-relied so much on countries like China. We need to do things differently. We need to put mechanisms in place so that, in the event that something comes, we are able to respond. And we need to ensure that we have programs in place in anticipation of any emerging crisis.

Locally, we are talking to potential manufacturers about zeroing in on manufacturing certain products so that we are able to respond to our own internal needs. Because, if the pandemic was to continue — even if Kenyans are not affected — they will be affected in some way.

Rennie: What advice would you give to supply chain professionals across the globe who are working to solve these problems right now?

Muriithi: All of us in the supply chain systems must ensure that we are in consonance with the expectations of our stakeholders. Looking at the pandemic, there is a potential crisis of stockouts of necessary essential medicines and medical supplies. There is every need for the international community to work together to ensure that support can be forthcoming.

Our government has been engaging with different governments to see how best we can get supplies from countries that are not as much affected or that have more supplies because they are manufacturing. It calls for common fronts and not just for the local governments, but all the international community, to work together to ensure that we are fixing this pandemic as a family of the living in the world.

Elizabeth Rennie is Editor-in-Chief for SCM Now magazine. She may be contacted at erennie@ascm.org.

Rapid Responsiveness and Innovation

Fri, 27 Mar 2020 00:00:00 -0500

As people everywhere confront the terrible effects of coronavirus, supply chains are adapting and stepping up to ease the impact. In addition to countless manufacturers producing around the clock for essential industries, many are retooling to provide first responders and health care workers with vital equipment. Others are reaching communities affected by the outbreak by manufacturing supplies, donating space for hospitals and much more.

Above all, health care systems worldwide are experiencing a severe shortage of ventilators. Companies including General Motors (GM); Vauxhall, a unit of France’s Peugeot SA; and engineering firm Meggitt are pivoting to build the life-saving devices.

GM and three of its parts suppliers spent last weekend brainstorming ways to boost production of ventilators at an Indiana plant that normally makes small electronic automotive components. The company is partnering with medical device company Ventec Life Systems for guidance. Vauxhall, which has ceased car production, plans to make ventilator components using 3D printing. And Meggitt is leading a group of firms that will produce tens of thousands of ventilators.

Meanwhile, the production of facemasks and other medical supplies — which had taken place mainly in China — is going domestic again. “It’s not enough to just stockpile,” Medicom Group CEO Ronald Reuben told The Wall Street Journal. “It’s very important to have your own local production.” His company has boosted the creation of masks across all of its global facilities.

In addition, nine American fashion and textile companies — including Fruit of the Loom, Hanesbrands and Parkdale — are collectively producing medical grade face masks. The effort to build a supply chain came together “virtually overnight,” led by North Carolina-based Parkdale, the largest yarn spinner in the country.

French blue jeans producer 1083 was approached by a group of doctors with written instructions for fabricating makeshift sanitary masks. Within mere hours, the workshop was churning them out.

Perfume makers, brewers, distillers and others are supplying hand sanitizer, something that has been missing from store shelves for weeks now. Givenchy and Christian Dior have switched from fragrances to sanitizers.

Anheuser-Busch is producing and distributing sanitizer under the guidance of the American Red Cross. French spirits giant Pernod Ricard SA is supplying alcohol for others to use in production and making its own sanitizer, as is The British Honey Company, which makes gin infused with honey. “An alcohol-based sanitizer is just vodka or gin at 70% [alcohol by volume],” explains Chief Executive Michael Williams.

Finally, with tourism plummeting, airlines are redeploying fleets to ensure the flow of essential goods. Deutsche Lufthansa AG, which has suspended 95% of flights, will make deliveries using grounded passenger jets. And two luxury hotels in Israel, Dan Panorama and Dan Hotel, have been repurposed into quarantine shelters.

ASCM is also responding

With so much uncertainty, it has never been more important for supply chains to be flexible and creative. Physical storefronts may be closed, but businesses can and should find new avenues to serving their customers. Here at ASCM, one way we are doing this is by offering our members and the supply chain community free online education.

Now through April 30, you will enjoy complimentary access to APICS Basics of Distribution and Logistics within Principles on Demand. This curriculum introduces the foundations and operations of distribution channel design, inventory management, packaging and material handling, transportation management, warehouse management, and much more.

This is a simple way ASCM can help supply chain professionals as they strive to mitigate the disruptions caused by the pandemic. Take advantage of this valuable offering today.

Prime Your Supply Chain for What’s Next with Digital Tools

Thu, 26 Mar 2020 00:00:00 -0500

It’s not just events like the coronavirus that lead to chaos; it’s the way people react to them. Who would have ever thought a virus could cause sever demand spikes for toilet paper?

Unpredictable behavior in response to macro events creates demand volatility in every link of our global supply chain. As the bullwhip effect demonstrates, it only takes relatively small fluctuations in supply or demand to create massive bottlenecks. Huge, unexpected demand changes can bring unprepared companies to their knees.

British economists John Kay and Mervyn King describe the situation we are facing now as a time of “radical uncertainty.” In the face of such vagueness, today’s companies need to be ready for anything — and not just one thing, but a range of possible outcomes. Getting ready for anything isn’t just about responding to negative crises, but also about being equipped to seize opportunities. For instance, there currently is an explosion in demand for bidets and shatafas, the “toilet showers” commonly used in countries including India and Thailand. If suppliers of these normally slow-moving, niche items had been unprepared for demand surge, they could have benefited from this shift in consumer buying behavior.

Ready for the new normal

Many companies are so immersed in their current problems that they haven’t begun to think about what happens when the crisis moves to its next stage. Manufacturers and retailers of nonessential items must prepare to get hit with a massive spike in demand. On the other hand, those offering toilet paper and hand sanitizer are likely to see an extended period of flat demand while consumers and resale channels burn through their stockpiles.

These spikes and troughs will have implications on forecasting, replenishment and distribution center operations that need to be planned well in advance to ensure the right inventory and staffing levels. Sales history — so critical to forecasting and inventory — is no longer reliable. Instead, planning systems need mechanisms that recognize outliers and exclude them from forecasts.

There are three stages involved with this preparation:

Predict more behaviors. As mentioned, companies need to scenario-plan for a range of different outcomes. Improve forecast accuracy with digital tools such as automation to factor in the impact of a wide range of variables — order size, location, weather, seasonality, social sentiment, the impact of promotions and more. Machine learning combined with human fine-tuning is likewise valuable for continually improving the demand model over time.
Protect against surprises (good and bad). Even if you’ve built a robust demand model, no system can predict every random trend or act of nature. However, automated planning with advanced algorithms can help companies use inventory to hedge against the “unknown unknown” risk factors. Using these systems, companies can define service targets for different items and markets, taking into account business objectives such as minimizing working capital, maximizing margin and reducing obsolescence risk.
Perform more efficiently. Once your forecast is fighting fit, tune your supply chain to minimize waste, meet service-level and cost targets, and achieve other key business goals. This will involve positioning the optimal amount of inventory at every point in your distribution network. A planning software that uses advanced algorithms or artificial intelligence can help you orchestrate the vast number of trade-offs this involves.

Resiliency resolves doubt

After a crisis like the coronavirus, planning for the usual will be impossible. However, supply chains that leverage digital tools including automation, advanced algorithms and machine learning will be best prepared to manage this ongoing challenge and compete more effectively. Your number-one defense against this radical uncertainty is a resilient supply chain that’s ready for anything. The better you prepare now during this time of crisis, the better you will be able to manage in the future.

10 Trends that Will Drive Your IT Investments

Thu, 26 Mar 2020 00:00:00 -0500

Technology leaders and their counterparts must work together to ensure they are maximizing the value derived from both current and future technology investments. The following predictions are intended to help organizational decision makers devise a strong investment plan for the coming year through 2025.

By 2021:

30% of manufacturers will have a digital application unit that uses low-code technologies to create business-relevant applications without needing the coding skills required.
20% of manufacturing companies will have started to treat their assets as internal customers, leading to a 40% reduction in asset downtime.
Half of all manufacturing supply chains will have invested in supply chain resiliency and artificial intelligence, resulting in productivity improvements of 15%.

By 2022:

The need for operational resiliency with data-driven processes will lead 60% of manufacturers to shift their smart factory focus from technology implementation to process change management.
70% of manufacturers will use cloud-based innovation platforms and marketplaces for cross-industry and customer co-development, creating 50% of new product and service ideas.

By 2023:

65% of the global manufacturers will realize a savings of 10% in operational expenses through process digital twins driven by the internet of things (IOT) and machine learning routines that factor in unstructured data sets.
60% of Forbes Global 2000 manufacturers will address growing industry talent shortages by making significant investments in intelligent robotic process automation.

By 2024:

40% of OEMs will leverage field asset IOT data to intelligently diagnose pending issues and resolve autonomously reducing unplanned downtime by 25%.
75% of all consumer-facing manufacturing companies will have materially transformed their supply chains to manage customization at scale, resulting in share gains of 2-3%.

And by 2025:

Driven by increased requirements for sustainability, 30% of manufacturers will be using blockchain and the IOT to provide reliable provenance, leading to a 90% increase in audit efficiency.

What’s next

To further maximize technology investment potential, keep the following in mind:

Talent, talent, talent — there is a major skills gap within supply chain that demands action. Put a process in place to capture the knowledge of your more senior employees, and provide workers with ways to collaborate and learn together. Talent can be your most valuable resource; make sure to constantly cultivate it across the organization.
Review your foundation — most manufacturing plants are lucky if they can connect to half of their assets on the floor. Digital transformation requires you to be ready for increasing levels of digitally enabled products and processes. This isn’t just about your applications, datacenters, and networks; it’s about core enterprise architecture and infrastructure decisions.
Create a single source of the truth — data within your enterprise and from connected products, supply chains and assets will increasingly be the starting point for new initiatives.
Focus on achievable outcomes — work with technology partners and focus your efforts on how technology helps solve existing business problems or anticipate future ones.
Invest in the short- and long-terms — look for technologies that provide efficiency and effectiveness today, yet enable capabilities that support your company’s digital transformation tomorrow.
Implement a partner ecosystem — no supply chain organization can transform by itself. Develop a network of partners to accelerate your information technology capabilities and serve the line of business. Great partners can help you move quickly, which is essential in today’s global marketplace.

5 Military Principles to Help Supply Chain Organizations in Uncertain Times

Wed, 25 Mar 2020 00:00:00 -0500

Uncertainty is one of the most destructive forces to plans and operations. Uncertainty builds fear, fear creates inaction, and inaction halts progress. Today, the uncertainty we are facing is fueled by closings, ongoing economic shocks, medical risks and an end that is not in sight. However, just as the U.S. military mitigates the effects of uncertainty through training and standard operating practices, military principles can help us all succeed and even thrive during the coming months.

To ensure that objectives are met consistently, the U.S. Military employs five basic tenets when conducting mission preparation, mission execution and leadership development:

Define the mission so everyone knows their purpose. Military planning begins with a mission statement that describes the who, what, when, where and why of how a plan will be executed. It is the one piece of information that everyone, from Private to General, understands to ensure the entire organization is working to the same end. During system and economic shocks, ensure that every employee knows their value, why their actions matter and how those actions fit the big picture.
Train everyone to the same high standard. Simply put: The best way to ensure people perform well in a crisis is to train them to perform well in a crisis. The U.S. Military’s training principle is to “train as you fight,” with a specific focus on execution. This ensures that all equipment, skills and responsibilities are centered around completing the mission in combat, in the dark, and in the rain. The rationale is that, if you can do the mission under the worst conditions, then you can perform successfully in reality. Define standards and conditions so training can be systematically evaluated and reproduced in different locations. Even in the midst of a crisis, training and retraining on key performance standards exhibits a feeling of stability and control when things appear to be spinning out of control.

Use Commander’s Intent to empower people to take initiative. Military planners use Commander’s Intent to help a plan maintain relevancy and applicability in a chaotic, dynamic and resource-constrained environment. Commander’s Intent is the description and definition of what a successful mission will look like. It details how the Commander (in other words, the CEO) envisions the battlefield at the conclusion of the mission. While it fully recognizes the chaos, lack of a complete picture, situational changes and other relevant factors that may make a plan obsolete when it is executed, it clearly shows what success looks like. This helps subordinates, guiding their initiative, ingenuity and improvisation as they work toward success even in a changing environment.
The After-Action Review (AAR) builds teamwork and improves operations. The purpose of an AAR is to conduct a fact-based and intensive review of an operation and determine what went well, what did not go well and how to improve in the future. The military employs the AAR process to improve the results of everything from supply convoys to data processing procedures to small-unit attacks. It brings everyone together, seeks to understand what happened and why, and then creates a training plan to correct mistakes and incorporate positive outcomes into future missions. Great AARs can be performed in 30 minutes, reduce employee isolation and cultivates collaboration.
Finally, maintain ethical behavior. When someone is overwhelmed, unprincipled conduct degrades performance and can even signal that all rules are off. Times of chaos are when leaders need to overemphasize their values and morality to ensure employees, customers and other stakeholders are served and protected.

Essential Demand Planning Strategies as Recession Looms

Tue, 24 Mar 2020 00:00:00 -0500

* This blog post is adapted from an article that first appeared in the Summer 2019 issue of the Journal of Business Forecasting, published by the Institute of Business Forecasting (IBF).

As the coronavirus outbreak develops, it seems undeniable that we are approaching the end of the current economic cycle and a recession is approaching. A recession is a meaningful event for most organizations, which necessitates that demand planning and sales and operations planning (S&OP) leaders prepare for the inevitable impact on our businesses.

I have worked three recessions during my career in demand planning, so I know a little about what to expect. I also know that each recession is unique. The recession of 2008 was different from 2001, and both were different from 1991. Some are bubble-influenced, like the housing bust of 2008, while others are simply soft-landing hangovers from rapid expansion like in 2001. Despite differences in the underlying causes, there are common recessionary themes that affect the demand curves of most companies.

First, a recession will alter your demand curve. Your customers — whether large retailers or original equipment manufacturers — will cut their forecasts, reduce their inventory and become more pessimistic in their forecasting. Like you, they will not get the timing right, and the result will be fits and starts in their ordering patterns. And if you use point-of-sale data (POS) to help you forecast demand or estimate trade inventory, you will start to see a disconnect or a divergence between POS trends and orders from your customers. There will be a lot more noise in the data and a true demand signal will be harder to discern.

So why the noise? Well, if history is a guide, activity relating to discounting and other retail trade will increase, and customers will offer more frequent pricing reductions or other ways to stimulate demand on either the virtual or physical shelf for the value-conscious consumer. Of course, your competitors will do the same, and the result will be a much more volatile demand pattern, which will make planning for both supply and demand more challenging. As you try to navigate these rough waters, it will be helpful to openly discuss the potential impact of scenarios such as these. This will allow for at least some understanding of shifts in key performance indicators (KPIs), such as buffer inventories increasing to handle the greater demand volatility and forecast error.

During a recession, value becomes a dominant consumer theme. Cash stressed consumers will seek the best cost. Generally, this results in both private and store brands, as well as off-brand or commodity products, picking up market share as consumers and customer move towards value. From a planning and S&OP perspective, your units might stay the same, but your revenue may decline due to a shift toward lower-priced goods. And with a mix shift in the products consumed toward value, strategies for competing or participating with products offering better value to the end consumer should be part of your S&OP decision-making process.

Managing new products will present a challenge as consumers are less likely to expose limited financial resources to try a new product. When my employer launched a new hair coloring product in 2008, it began to flounder. Our initial demand sensing of POS results reflected a serious gap to expectations. We realized we had to take drastic measures, so we gave away free product, offering “free-bates” to help stimulate trial activity among our consumers. It worked.

Noting the economic downturn with historically high unemployment, we also focused our advertising creative on how this product might help in a job interview to directly appeal to the unemployed segment. This too helped drive trial and interest in the product. The key lesson is that, in anticipation of a sure-to-come downturn, it is reasonable to expect your customers or consumers to be hesitant to shift to — or even buy — new products without some compelling reason to do so. And to the extent possible, it would be wise to anticipate this type of dynamic throughout your new product planning processes.

It is not just the consumers that are averse to new products. Traditional brick-and-mortar retailer acceptance of new products will also be a challenge. These retailers tend to batten down the hatches, preferring to lean in to known brands and products and lower-priced store-brand or private-label offerings during recessionary times. Not only will this make obtaining new product distribution more difficult, but it is likely to result in some marginal items being delisted. Such activity indicates why examining risk in your product portfolio is central to planning before and during a recession.

Similarly, you are likely to notice a shift in your product mix. While lower-priced offerings might sell better, so too will larger-size/better-value offerings. Bonus packs, upsized offerings, on-pack couponing, multipacks and similar strategies will prove themselves to be smart, tactical alternatives for increasing consumer interest at shelf and for holding ground against private-label offerings. Being prepared for this potential mix of shifts — if only on paper — will help you improve your reaction time if and when response tactics are called for.

Finally, trade inventory will drop, if only because your customers will lower their forecasts. For example, if your customer keeps four weeks of supply based on weekly demand of 100 units, then normal inventory would hold 400 units. If the forecast is cut to 90 units per week, however, the inventory target will drop to 360 units. In short, you should be prepared to address unexplainable drops in your customer’s inventory that are not aligned with historical trends.

Immerse yourself in the past to prepare for the future

Recession hits each business in unique ways. To position your company to respond effectively, begin by burrowing deeply into all institutional data retained from prior recessions. Curate the facts into an economic narrative of sorts. Find old S&OP content and consensus reporting, or ask veterans of the business their opinions on the subject. These will all offer some guidance for the future. Incorporate all the dynamics of your firm’s reaction: an assessment of what worked (and didn’t); an evaluation of competitor activities and reactions; and maybe even a snapshot of economic indicators before, during and after the recessionary period. If you don’t expand your analysis to paint a complete picture, you will be short-changing your own research.

Next, reset your thinking. While most forecasters have a tendency toward a positive bias, force the stakeholders of your operational processes to look at plans with greater levels of scrutiny and skepticism. Use the results of your own historical data dig to enlighten the discussion. Make upside forecast moves based only on hard facts, not conjecture or opinion. Expect mix shifts in products. Use shorter trending metrics to forecast forward. Work on building different demand scenarios to estimate impact on the business, both top-line and bottom-line.

Examine your product portfolio. Are you thinking of launching a high-priced premium offering sometime within the next year? How will you propose to punch through the economic noise and gain acceptance of your product when consumer dissonance for anything new and expensive may be heightened during a recession? Do you have products already at risk that may go under during a recession, or is there some way to make such items more desirable to retailers or resellers from a margin perspective? Prepare your commercial innovation backlog with tactical options such as bonus or instant redeemable coupons, so you can be agile in the wake of declining economic results.

Use predictive analytics tools to see how your demand curve reacts to differing economic stimuli. Some of these products leverage large econometric databases. Prepare to align emerging economic factors against your own POS or shipment histories and look for correlations, latency and inflection points. Also identify products or product families that are counter-cyclical and may see an uptick and plan to leverage this dynamic. Understanding the leading economic indicators and their latency on your business will help you plan better in good times and in recessionary times.

Monitor key indicators of economic activity. During both the 2001 and 2008 recessions, my planning group provided an informal analysis of about 25 key economic indicators, from housing starts to unemployment to consumer confidence. We looked for the aforementioned correlation and latency impacts to determine what items were impacted by specific economic indicators and how long it took these results to manifest themselves within demand. Start tracking these indicators.

Start now

Bring all of these conversations to S&OP — now. Escalate the discussion about recessionary contingencies to the executive review phase of the S&OP processes. Create a one-slide summary of key factors likely to have the greatest impact on your business, and track them in each meeting.

When you’ve weathered as many recessions as I have, you learn what to look for and you recognize promising responses that have worked in the past. Some of the most interesting dialogues I ever had in the S&OP process occurred during difficult economic times. Act now to initiate forward-looking conversations about recessionary impacts. It is a fiduciary responsibility of the planning role that requires this difficult discussion.

Enhance Remote Team Performance in the COVID-19 Environment

Mon, 23 Mar 2020 00:00:00 -0500

Escalating concerns about the impact and spread of COVID-19 are causing major changes in the way businesses and society operate, nationally and internationally. As a result of major anxiety about health safety, businesses are taking precautions as they cancel events and ask employees to work from home. While remote workplaces are nothing new, the importance of effective, consistent communication in this environment is essential to maintaining productivity. Here are seven ways to boost remote communications:

Manage proactively. When managing remote workers, one of the keys to success is being proactive, rather than reactive. Clearly define roles and assignments to staff. Don’t wait for progress reports or updates. Instead, initiate communications regularly with staff of all levels to ensure projects are progressing, that employee workload is reasonable, and to understand when individuals require additional help or can take on more.
Maintain a culture of transparency. By initiating communications from the top levels of the organization, leaders model expectations and behavior that encourages employees at all levels to do the same. Interestingly, 85% of employees say they’re most motivated when management offers regular updates on company news. Share financials, personnel changes, new clients and ongoing developments. Keep all stakeholders informed of changes and projects to boost understanding and contribution.
Prioritize email and mobile communications. Since spontaneous and face-to-face interactions will be less frequent, increase reliance on email and mobile communications. There are 5 billion cell phone owners around the world, making mobile communications one of the most ubiquitous. Email reigns high as a method to get in touch at any time of day, directly to a person’s inbox, with the option of bulk sending. When 60% of work email accounts get checked one or more times a day, email serves as a vital communication method for a remote workforce.
Maintain an internal communications plan. Because internal communications can significantly influence employee productivity, make sure you have a current internal communications plan. Internal communications include employee newsletters and email communication, employee manuals and handbooks, newly produced and distributed press releases, webinars, and live chats. Ensure consistent communications are kept top of mind, especially during times when workers may be confused or concerned.
Use technology to your advantage. There are countless software applications built for communication. These can be messaging apps, video conferencing software, webinar platforms, social media distribution apps, listening marketing apps, customer relationship management software, project management software and more. In times when many workers are operating remotely, the use of these applications can greatly increase ease of communication and project management. If you’re unsure where to start, check out some of our recommendations in this blog.
Create and share a detailed schedule. When a large number of workers are operating remotely, it can be difficult to coordinate all the moving parts. By developing a shared schedule, employees will know how to stay on track, when to bring topics to a group meeting, which projects to prioritize and when to ask for help. Ensure your schedule is visible and known to all. Continue to adjust as needed.
Create a collaborative culture. One of the key factors to a successful remote team is inclusiveness, despite physical distance. Sometimes, this is easier said than done. To foster collaboration, be transparent and ask open-ended questions to get insightful input. Lead with the intent of listening, learning from and growing with your team. Allow traditional methods to be challenged and new ideas to flourish. Encourage staff to learn from each other and work together. Open communication across multiple staff levels creates collaboration, facilitates better understanding and produces innovative ways to enhance performance.

A time to pull together

COVID-19 is forcing many of us to avoid contact and remain in our homes as much as possible. This environment, however, doesn’t mean that we’re alone. With our digitally connected society, we can maintain community despite physical distancing. This isn’t a time to separate, but to continue to pull together, spotlight successes and focus on people. Use these tips to continue to prioritize relationships, communication and connection without sacrificing health and safety.

Responding to Demand in the Age of COVID-19

Fri, 20 Mar 2020 00:00:00 -0500

As the coronavirus outbreak develops across the globe, Amazon is reporting a surge of orders putting extreme pressure on its operations. To keep up with online shopping demand, the retail giant plans to hire 100,000 people and raise pay for workers at its warehouses and delivery centers.

“Getting a priority item to your doorstep is vital as communities practice social-distancing, particularly for the elderly and others with underlying health issues,” says Dave Clark, senior vice president of worldwide operations. “Our labor needs are unprecedented.”

With numerous governments encouraging people to stay in their homes, Amazon isn’t the only company realizing that it must ramp up hiring. Supermarket chain Kroger has immediate positions available in its retail stores, manufacturing plants and distribution centers. And in response to ongoing sold-out time windows, grocery delivery service Fresh Direct is adding drivers to take on additional slots.

“The workers who stock shelves; operate registers; and deliver meals, groceries and medicine are filling a vital role,” writes Charisse Jones for USA Today. They are becoming the linchpin that connects businesses to consumers.

Australian supermarket chain Woolworths has hired more staff in preparation of exclusive shopping hours that have been added for vulnerable populations, such as the elderly and people with disabilities. The grocer also recently required additional people to restock shelves stripped bare by panicked shoppers. In fact, Woolworths closed all of its stores nationwide for one night in order to fill them up again.

As urgency and fear propel people down the aisles, the frantic pursuit of groceries and household goods has been pushed to an intense level, writes Corina Knoll for The New York Times. She goes on to quote Walmart Chief Executive Doug McMillon: “The areas where we’re seeing pressure in the supply chain are surface cleaners, cleaning supplies, paper goods in particular. … Hand sanitizer is going to be very difficult to have 100 percent stock on for some time. We’re still replenishing it and shipping it, but as soon as it hits the stores, it’s going.”

Easing the anxiety

There is no doubt that the coronavirus outbreak is a rare challenge for supply chain professionals. As consumers continue to stockpile, and false demand signals are repeatedly triggered, we are experiencing the bullwhip effect in real time.

Thankfully, as the APICS Dictionary app points out, “The bullwhip effect can be eliminated by synchronizing the supply chain.” Indeed, after rushing to meet irrational buying and massive demand spikes, supply chain leaders must work together to prepare for new challenges ahead.

Potential approaches include modifying algorithms in demand planning systems, manually adjusting orders, managing demand planning with spreadsheets, and monitoring any new problems that arise as a result of tweaking orders. Gain additional strategies from ASCM’s new webpage dedicated to content and resources on the coronavirus pandemic. The page includes valuable content from supply chain risk management experts and ASCM leaders, and we are committed to updating it continually as the outbreak develops.

In addition, keep the conversation going in ASCM's Real-Time Impact COVID-19 community. This is an exclusive community where members can connect as we navigate the supply chain impacts of coronavirus. Ask important questions, share and learn from one another. I invite you to log in to the Supply Chain Channel and join the community today.

8 Tactics to Manage the Impact of Coronavirus on Your Supply Chain

Fri, 13 Mar 2020 00:00:00 -0500

Yesterday, ASCM hosted a webinar on supply chain preparedness in the face of COVID-19. Cosponsored by Supply Chain Canada, the event featured Jim Kilpatrick, global supply chain and network operations leader at Deloitte Consulting; and Gregory Schlegel, CPIM, founder of the Supply Chain Risk Management Consortium. These risk management experts discussed numerous topics related to the outbreak and its ongoing effects on supply chains around the world. Following are some of their key strategies. I hope they will help you and your organization navigate the crisis, mitigate any negative impacts, and position your networks to succeed as markets ultimately return to a normal cadence.

Those companies that were prepared — particularly with digitized supply chains — are of course more likely to fare better. However, it’s not too late to take meaningful action. Your first goal should be to ensure the safety of your people. Follow the Centers for Disease Control and Prevention guidelines. Give your workforce a constant, calm, flow of reliable information. Restricted travel policies are a beginning. Also implement screening protocols, increase workforce hygiene standards, and promote telecommuting and other flexible arrangements. Encourage people with preexisting conditions, who are more susceptible to the virus, to self-declare. Then, proactively shift them to remote work.
Identify key suppliers in affected areas. Stay in contact with them hourly and, if necessary, secure alternative sources of supply. If you are in a position to do so — particularly financially — reach out to your partners, understand who their suppliers are and ask how you can help. Accelerating a partner’s time to recovery not only helps them survive the threat, but also ensures your own future success. Work broadly to make a difference for others in fair and reasonable ways.
Without cashflow, you don’t have a business. To ensure liquidity, stop discretionary spending. Then, gauge your free cashflow through July 2020 at least. Next, calculate and manage your cash conversion cycle, taking into consideration receivables, days of supply plus inventory and days of supply minus payables days. Finally, if you have purchased supply chain disruption insurance, begin to exercise that policy as needed.
Depending on your business, some demand will shift to online channels. Maintain an integrated view of inventory, and segment or separate inventory for online versus retail. Ensure you have the capacity to handle the volume coming into your distribution centers, as well as last-mile capacity.
As previously mentioned, digitization is key to efficiency, collaboration and synchronization. To orchestrate your extended supply chain, use emerging technologies including the internet of things, artificial intelligence and machine learning. Digital supply networks help buffer risk with far less overhead. In addition, once your supply chain is digitally modeled, you can run discrete event simulation to see how your network reacts to certain stimuli.
Subscribe to a digital alert system. This software-as-a-service scans the world every 30 minutes looking for all types of risk events.
Keep in mind that we will eventually recover. To prepare for the rebound, communication and collaboration will once again be vital. As supply chains restart, everyone must be on the same page, especially with regards to what to produce first. Set priorities, and work as quickly as possible to get back in sync.
Continue making supply chain risk management a priority. Develop response plans, particularly for the most impactful risks. Keep monitoring your global networks, and have a playbook in place going forward.

Supply chains are stepping up

This is a moment that matters for the supply chain profession. It’s not only what we do, but how we do it. Deloitte’s Kilpatrick put it very well: “It’s easy, as supply chain professionals, to talk about demand shocks, assurance of supply and operations management. But at the end of the day, this is a people issue.”

ASCM is here to support you as you guide your people through this risk event and demonstrate supply chain’s vital purpose. If you missed the webinar, you can begin right now by watching the recording and gain even more strategies for success.

Close the Supply Chain Skills Gap with Reskilling and Upskilling

Wed, 11 Mar 2020 00:00:00 -0500

In our ever-changing world, we must be willing to adapt if we are to keep pace with new realities. As our environment evolves, so must the way we live, learn and work.

Industries evolve with technology, and that means the workforce needs to evolve as well. Supply chain is no exception. This field already has to contend with a number of technological and systematic advancements — and several more game changers are just over the horizon. Let’s look at a few of them:

Omnichannel distribution creates multiple interaction points for sellers and customers. It’s not just a store pickup or delivery world anymore. This increased complexity opens the door for even more consideration of artificial intelligence and robotic solutions.
Additive manufacturing, or 3D printing, also continues to alter the supply-and-demand model. An increasing number of products now can be created on demand, eliminating the need for extensive stockpiles. It also can improve spare parts availability for certain products, increasing their lifespan.
The manufacturing landscape is becoming leaner, more effective and more dependent on cutting edge technology — and that’s without even considering the near-future promise of shared people and freight initiatives and autonomous vehicles.

But in discussion of these various trends and advancements, one question remains the same: What about the workforce? What about the people? How do current supply chain employees factor into this leaner, smarter industry model?

For starters, let’s consider some of the more traditional roles. Automated and semi-automated trucking systems still are a work in progress. Estimates vary on when we’ll actually see the likes of dedicated autonomous trucking lanes, but they certainly won’t pop up everywhere at once. Human drivers are still in hot demand, and we actually have a shortage of truckers and an aging trucking workforce to contend with. The same can be said for forklift operators. Many young people just entering the workforce may not be attracted to these positions. However, they’re still a vital part of the supply chain.

Supply chain jobs in general are on the rise, and that includes a host of essential high-tech roles in data analysis, cloud solutions, supply chain planning and risk management. Supply chain employment is projected to grow in line with the national average of 9% over the course of the next decade. Tomorrow's skilled workers will have to leverage technologies like artificial intelligence, geographic information and immersive reality to ensure a functional supply chain.

For the current and emerging workforce, this creates two challenges:

Many young people entering the workforce hear the phrase supply chain and envision hard, physical labor or vehicular roles. Certainly, those roles exist, but now more than ever we have an exciting slate of jobs that defy such expectations. This is, of course, a messaging and recruitment challenge. For new, skilled hires, the ideal career approach may be to start off in operations before transitioning into technological or tactical roles.
There is a need for reskilling. No one wants to be replaced by a new machine or technology, and companies shouldn’t have to lose valued employees in the name of technological progress either. Forward-thinking companies are choosing to upskill and reskill existing employees, rather than depend on layoffs and new hires. Amazon recently announced that it will spend more than $700 million to train 100,000 employees for higher-skilled jobs. It’s a six-year undertaking in which the company plans to reskill workers through its Amazon Technical Academy, Machine Learning University, Amazon Web Services Training and Certification program, and other programs.

Whether you’re looking to reskill current, dedicated employees or the local talent pipeline, it all comes down to bridging the gap through effective training, education, support and placement. The tools already exist; it’s just a matter of making sure they’re properly leveraged throughout the supply chain field and within major supply chain–intensive companies.

The supply chain is vital. People need delivered goods, and the supply chain employs a huge number of workers who make that happen. Although employment opportunities in this field will increase in line with the national average, the jobs themselves will change to include a variety of high-tech roles to meet the needs of a technologically evolving field. Digitalization and disruptive technologies, which affect all industries across the board, will only continue to force us to embrace change. Reskilling and upskilling programs are more than a mere generational necessity. They’re an essential step to ensure adaptability and sustainability.

Exciting Tech Revitalizes the Value of Plastics

Fri, 06 Mar 2020 00:00:00 -0600

“For decades, product design, production, sale and use have followed the take, make and dispose industrial model,” writes SCM Now magazine “Relevant Research” author Richard E. Crandall, PhD, CFPIM, CIRM, CSCP. “The manufacturing company takes natural and synthetic resources; converts them to a product; and then sells the item to a consumer, who ultimately uses and then disposes of it. In this model, products are designed to be sold at a low price, are not intended to have long lives and are difficult to service.”

This traditionally linear economy too often creates substantial amounts of waste and exhausts natural resources. However, the concept of a circular economy — one in which all of the by-products of process A become the raw materials for process B — is emerging as one of the most promising trends in supply chain.

A circular economy fully exploits resources and “squeezes out every bit of value,” writes Supply Chain Strategist Deborah Dull in the ASCM blog. Such business models are on track to add $4.5 trillion to the global economy by 2030.

One organization actively pursuing this opportunity is BASF, which is using blockchain to improve the traceability of recycled plastics. Its pilot program is a response to what company leaders call “one of the most pressing environmental challenges — plastic waste.”

Furthermore, BASF believes the scalable blockchain solution will support the track and trace and monetization of plastics within its supply chain. “Much of the collection and sorting activities are challenged by manual processes and material contamination,” BASF Canada President Marcelo Lu said in a media release. “Additionally, traceability is a concern as new commitments start to emerge from brand owners and retailers.”

A successful implementation will result in “a collaborative digital consortium,” uniting plastic manufacturers, suppliers, government entities, retailers, waste collectors and recyclers in the mission to keep the lives of plastic molecules circular, explained Anthony DiPrinzio, who leads the BASF Blockchain Lab, in the release.

Last week, Gartner released a survey, which found that 70% of supply chain leaders are planning to invest in the circular economy in the next 18 months. The research shows that blockchain is just one tool supporting circular economy goals. Gartner says organizations are also tapping into the capabilities of advanced analytics, 3D printing, the internet of things and machine learning.

Sarah Watt, Gartner senior director, notes that businesses are embracing this trend because the circular economy creates an ecosystem of materials: “What was previously viewed as waste now has value.”

Full circle

BASF is using innovative methods to realize this value. Interestingly, the company has been recognized before for its efforts to blaze trails and find solutions to pressing problems. The organization is a past winner of the ASCM Awards of Excellence — the premier supply chain awards program for corporations and individuals.

The Call for Entries is now open, giving you the chance to be the next to join this distinguished list of honorees. The corporate award categories are:

Corporate Transformation
Learning and Development
Making an Impact.

The individual award categories are:

Emerging Supply Chain Leader
Supply Chain Leader
Diversity and Inclusion Champion

Learn more and enter today at ascm.org/awardsofexcellence. Good luck!

Digital Transformation in Supply Chain Planning: Barrier or Enabler?

Thu, 05 Mar 2020 00:00:00 -0600

Has your company initiated a digital transformation initiative? Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to improve business performance. When the latest technology is implemented correctly, it has the potential to optimize processes, reduce costs and boost earnings. In fact, McKinsey & Co. estimates that companies that aggressively digitize their supply chains can boost their annual earnings before interest and taxes by 3.2% and their annual revenue by 2.3%.

However, if your company has not yet embarked on its digitization journey, you certainly are not alone. A 2019 digital transformation study by ToolsGroup and Spinnaker found that only 7% of participants are reaping the benefits of digital transformation of supply chain planning. More than half of respondents still are exploring and evaluating their options, another 8% are working on gaining broad organizational support, and about a third are in the process of implementing and deploying the technology.

At the same time, about 90% of the nearly 200 surveyed supply chain professionals noted that volatile demand and unpredictable customers are at least a moderate supply chain planning challenge. This requires faster, more agile supply chains enabled by digitization.

So, what’s holding everyone back?

Fear of change was the number-one barrier mentioned by respondents. Change management is difficult to begin with, and some executives may resist investing in technologies that do not have a proven track record of success. In addition, employees may resist the influx of technologies, worrying that their jobs will significantly change or be eliminated. McKinsey & Co. advises that these fears can be assuaged by explaining to stakeholders what the digital transformation actually means and highlighting its benefits, such as an improved customer experience, greater service levels and higher productivity.

Along with fear of change comes some of the practical aspects of change, such as whether workers have the skills to work with the new technology. Planners and other supply chain practitioners in the new digital world need skills in communication, decision making and change management on top of the standard technical skills. In line with this, about one-third of companies reported that they are investing in staff training to help fill knowledge gaps and further increase the success of digital transformations.

About 25% also say they are risk averse and therefore have not pursued digital transformation with gusto. This is logical, because many types of technology are still new, and use cases are yet to be substantially proven. Furthermore, with so many different technology options — even for a specific type of technology — on the market, it is difficult to know which types of technology and brands deserve investment.

The bigger picture

In reviewing the results of the “Digital Transformation in Supply Chain Planning: On Pace or at Risk?” study, two big points stand out to me. First, digital transformation is not a singular activity. It is a set of interrelated activities that span across people, processes, technology, policies and metrics. Organizations are actively working to strike a balance across all those dimensions. They need innovative planning technologies that support operational business goals, skilled personnel to apply the technology profitably and change management to effectively embed these capabilities into corporate culture.

Second, although progress might seem slow, the fact that 27% of respondents are in the executing phase shows that efforts to realize the benefits of digital transformation actually are moving forward at a fast and furious pace as companies identify use cases, build roadmaps, and select and deploy technology. Indeed, 21% of respondents are working on projects related to the internet of things; 18% robotics; 16% artificial intelligence; 14% machine learning; and 12% augmented and virtual reality, blockchain and drones.

But, as with any other technology project, there is not a one-size-fits-all approach to digital transformation. Company leaders need to seriously consider the business cases of the various technologies and evaluate how different technologies can benefit their organization’s goals. From there, they need to set a roadmap that plans out the steps in their digital transformation, which is not just a one-and-done activity but rather a set of projects that add up to a huge competitive advantage.

In addition, organizations should consider what is holding them back from digital transformation. How can these roadblocks be overcome? And what do you stand to gain?

Unavoidable Disruption — and Why It’s a Good Thing

Fri, 28 Feb 2020 00:00:00 -0600

Disruptive innovation, a phrase coined in 1995 by Harvard Business School Professor Clayton Christensen, describes a product or service that initially takes hold at the bottom of a marketplace, but relentlessly expands until it eventually displaces established competitors. Some well-known examples include personal computers supplanting mainframes, mobile phones replacing hard-wired lines, and subscription streaming services overtaking video rental stores.

Additionally, a disruptive innovation often gives “a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill,” Christensen says.

Disruptive innovation is happening right now in the American whiskey industry, thanks to a new wave of rapid-aging by craft distilleries. “Imagine that you run a business where, above all else, your customers value how long it takes to make your product. That, hands down, is your competitive advantage,” Chuck Swoboda writes for Forbes. “But then you discover that time no longer matters. A gang of new start-up companies comes along — and they’re making a similar product in a fraction of the time. It’s a classic industry disruption.”

Swoboda says established distillers such as Johnnie Walker, Knob Creek and Woodford Reserve age their whiskey in oak barrels or casks, often for decades. Conventional wisdom has been the longer it matures, the better it gets. But traditional companies are suddenly at risk of losing their edge. Innovations such as UV light that quickly breaks down alcohol molecules, intense heat that accelerates the chemical reaction process, and smaller barrels to increase surface area contact are enabling craft distillers to produce fine whiskeys in days, not years.

Currently, there are more than 1,500 of these companies in the United States — accounting for about 5% of sales nationwide — but with the ongoing popularity of the craft movement, that number is certain to grow. And these businesses are making excellent products: Some rapid-aged craft distillers have won gold medals; others are receiving honors such as being named Whiskey Innovator of the Year.

Changing the world

The APICS Product Life Cycle Operations Reference Model (PLCOR), a reference for innovation, product and portfolio management, includes strategies for coping with disruptive innovation. Best practices include supply chain risk management, bowtie risk management (an evaluation method used to analyze and demonstrate causal relationships in high-risk scenarios), product and portfolio risk management strategy implementation and analysis, maintaining a product and portfolio risk register, monitoring product and portfolio risk, and product and portfolio risk assessment.

In addition, the ASCM Enterprise Certification is a trailblazing corporate supply chain program and the first and only designation measuring social responsibility, economic sustainability and ecological stewardship. ASCM Enterprise Certification empowers organizations to reach goals, improve results and be more competitive in today’s global business world. This unique program can help your organization

gain a competitive advantage by showcasing economic, ecological and ethical supply chain practices
demonstrate transparency to prospective customers and consumers
ensure suppliers align with your organization’s values
manage accountability to support your organization’s ethical standards
embrace a culture of social responsibility.

Get started today by completing the free, 30-minute Enterprise Supply Chain Maturity Assessment. ASCM will then aggregate data from participant responses to generate a benchmarking report with cross-industry information. Take this essential first step — the knowledge you gain will set you on your way toward creating a better world through supply chain.

Make the Best of Ongoing E-Commerce Challenges

Wed, 26 Feb 2020 00:00:00 -0600

Numbers are a proxy for reality. E-commerce has been growing rapidly and even accelerating in the last 10 years. Forecasts by eMarketer estimate that online sales will reach more than $4 trillion in 2020. This rapid growth in e-commerce is spurring dynamic changes that greatly influence the logistics and transportation management that support the retail industry. Here are five key areas being affected by the rapid e-commerce growth.

1: Delivery speed. Consumers have become increasingly impatient throughout the last few years. When they previously would have waited a few days for product delivery, they now expect next-day, same-day or one-hour delivery. Most are even willing to pay extra for the quick delivery. However, if an item will take too long to arrive, the consumer may choose to buy something else or select a different retailer.

All of this puts pressure on the retailer to ensure that each product leaves the warehouse on time and that the transportation method used — whether plane, train, truck or other vehicle — is fast and efficient enough to ensure timely delivery.

2: Customized delivery expectations. But efficient deliveries are not consumers’ only expectation. Shoppers of today also want to customize their deliveries, including when, where and how they receive their orders. Perhaps a consumer wants a package hidden in his or her yard on a specific day of the week. As a result, it has become necessary to process smaller shipments, which translates to an increase in transportation costs. Although some consumers are willing to pay extra for these custom delivery services, retailers still are looking for ways to make this whole process more efficient and cost effective.

3: The returns challenge. With online purchases, consumers cannot touch, feel or try on their items before they buy them. As a result, they are more likely to return items that do not meet their expectations. When this happens, the cost of the return as well as the effort of planning the return usually fall on the retailers’ shoulders. The process also usually involves a third-party courier service to pick up the items from the consumers and return them to the appropriate facilities.

Once the items are received, retailers need to figure out what to do with them. Depending on the issue, the items could be resold as new or at a discount. Some items will need to be refurbished or repackaged in order to make this possible. In addition, the retailer must ensure that a replacement item, if requested, is sent to the consumer in a timely manner.

To handle the growing number of e-commerce returns, some companies have had to hire whole departments to ensure returns are handled efficiently and effectively. At the same time, retailers also are looking for solutions that can better facilitate this process. Undoubtedly, artificial intelligence solutions will turn up soon to handle this logistics challenge.

4: Storage shifts. Warehouses used to be the main holding points for items that were waiting to be shipped to consumers or ones that were received as returns. However, with demands for more frequent, quicker deliveries, brick-and-mortar stores are becoming the new warehouses, as they often are closer to the consumers placing the orders. Store personnel can pull items from store inventory and then pass them to their own delivery team or third-party couriers, such as UPS, FedEx, DHL and Royal Mail, for home delivery. Companies that do not have brick-and-mortar stores may opt for smaller, local warehouses to fulfill deliveries in certain areas. Because the delivery distance is shorter, items can be shipped more quickly and cost effectively.

Of course, more storage locations equates to more logistics challenges. Route optimization becomes critical for ensuring that items are moved from place to place efficiently, and effective item and vehicle tracking is necessary to make sure orders are delivered on time and in full.

5: Increased tracking technology requirements. In order to keep up with the ever-increasing expectations of e-commerce consumers, companies must ensure they invest in effective tracking technology. Improved inventory management, warehouse management and transportation management programs help retailers ensure that they have the ordered items in stock and transfer them to the proper locations via the most efficient methods, given the timing expectations. Disruptions occur when companies are unsure where a certain item is being stored or when inventory is miscounted and needs to be reordered from the supplier or manufacturer. Similarly, in the case of brick-and-mortar stores acting as warehouses, if an in-store item is not placed in the proper shelf location, it will take more time for the store employee to find it and ship it to the consumer.

Overall, the e-commerce industry needs better logistics and transportation management support to better serve consumers. The constant and rapid growth in the market is bound to keep influencing and driving changes in the logistics and transportation aspects that help keep the industry afloat. With the projections for growth, one can only imagine that more changes will be coming soon.

Engaging Future Talent

Fri, 21 Feb 2020 00:00:00 -0600

More and more organizations today are discovering nontraditional ways to fill the growing talent gap. Some are founding entirely new technical schools. Others are hiring ex-convicts. And companies including IBM are tapping into people who lack advanced degrees.

An article in the Raleigh, North Carolina-based News & Observer describes a 12-month-long apprenticeship program that was launched by the IBM office in the state’s Research Triangle Park (RTP) innovation hub. The initiative enables people with only high school diplomas to gain valuable skills in coding, cybersecurity and more.

The piece tells the story of Tony Byrd, a 27-year-old father of two, who had been working at the coffee shop in the IBM facility’s main lobby since graduating high school about 10 years ago. Byrd recently completed his apprenticeship, which enabled him to get paid while gaining 200 hours of education.

“Now you can find him buying coffee from the same bar he used to run,” the article says, “except this time as a full-time IBM employee.”

The program began at IBM’s RTP office in 2017. Since then, about 200 trainees have graduated, 90% of them joining the IBM staff. As an added benefit, IBM Director of Career and Skills Kelli Jordan says the training has increased the company’s workforce diversity. “We do see candidates who may have not been able to go to a traditional college but have been able to build skills,” she says.

Jordan also told the News & Observer that the concept was “born of necessity” because of the worsening skills shortage. A new Korn Ferry study, which includes a country-by-country analysis, supports this reasoning. The report says there simply aren’t enough people to fill open jobs. Furthermore, by 2030, the global gap will total more than 85 million openings.

Making the case

Just as IBM knows it must recruit differently — with both classroom and real-life projects for its apprentices — ASCM is addressing the ongoing supply chain talent gap through our Case Competition, in collaboration with Deloitte Consulting. In the preceding edition of SCM Now Impact, I shared information on last week’s regional rounds, where 64 teams competed in Amsterdam, Atlanta, Chicago, Hyderabad, Mexico City, Philadelphia, San Francisco and Singapore. On behalf of all of us at ASCM and Deloitte, I want to congratulate those who will be advancing to the finals at ASCM CONNECT, September 13-15, in New Orleans:

Georgetown University
Jade University, Germany
J. Somaiya Institute of Management Studies, India
Rutgers University
Singapore University of Technology and Design
University of Houston
University of San Diego
University of Wisconsin - Eau Claire

Ken Olsen, managing director and global supply chain planning leader at Deloitte Consulting, puts it well, calling the Case Competition “an invaluable opportunity to challenge students to address complex, evolving supply chain scenarios that will serve them in their future careers.”

This year, we saw incredible growth and diversity in participation, with 309 teams representing 137 schools from 24 countries. A total of 1,236 undergraduate and graduate students are competing, collaborating and learning about supply chain — while getting inspired and engaged to be an integral part of tomorrow’s networks. I hope you will come to New Orleans to join us in cheering them on.

Prepare Your Supply Chain Organization for Blockchain

Thu, 20 Feb 2020 00:00:00 -0600

Blockchain is garnering a tremendous amount of hype as a potentially world-changing technology in the realm of manufacturing and supply chain. Advocates tout benefits such as increased efficiency, reduced transaction costs, and more control and transparency across all supply chain activities. The technology may well transform manufacturing and supply chain operations, but, before this vision can be realized, learn how to overcome the typical hurdles.

Of course, there are technology maturity, resource requirement and scalability challenges. Three basic elements are essential to making a blockchain a cryptographically secure, trusted network: public key cryptography, a distributed or peer-to-peer network with a shared ledger, and a governing program that contains the controlling blockchain protocol.

In addition, because blockchain technology still is relatively new, there is a general lack of accepted standards and governance models, regulatory oversight, and understanding of when it is a better solution than existing technologies. Effectively addressing these issues will drive the adoption of blockchain solutions.

Commonly accepted blockchain or distributed ledger standards do not exist and are only now being discussed by industry groups. Though more technically related standards like enterprise security and interoperability are needed, the business and regulatory issues such as legal, tax and regulatory compliant accounting standards are equally as important.

For example, a blockchain would likely consist of nodes that are geographically dispersed, each potentially under different legal and tax jurisdictions. How does the blockchain remain compliant with a variety of legal and regulatory schemes for these geographically disparate nodes? Clearly a standard defining the law and jurisdictional compliance would need to be in place to ensure a company has certainty around the laws to be applied in case of disputes.

Appropriate use cases

Satoshi Nakamoto, the person or persons credited with developing Bitcoin, originally discussed blockchain in the context of a very specific use case, that of a peer-to-peer version of electronic cash. Although the original idea was to distribute records and processes without a middleman, there still isn’t a clear understanding of the best-fit use cases for this technology, particularly in manufacturing and supply chain operations.

For example, supply chain traceability often is cited as a potential use case because all supply chain partners would be required to post their transactions to the blockchain, thereby ensuring a secure, highly visible chain of custody. But what happens if a member of the supply chain posts fraudulent activity, such as by labeling a counterfeit product as authentic in the blockchain? How would other members of the supply chain vouch for the validity of the transaction if they weren’t physically there? Clearly, internal processes are needed to ensure that posted transactions, such as a quality inspection, occurred. Does that require a blockchain within a blockchain to validate that inspection? A better question to ask is whether or not this actually is a good use case for blockchain technology.

Use cases may also depend on whether the shared network is public or private. It seems that the best are those that prioritize the characteristics of robustness, chain of custody, decentralization and proof of source instead of speed and scalability. Private or small consortiums may exist that don’t demand full trust among participants. These users may be willing to sacrifice trust for speed, privacy or auditability.

How about cryptographic security? Some blockchains may not require a majority of nodes to complete the complex mathematical algorithm, also known as proof of work in Bitcoin terms, to participate. If this function is not required by a blockchain, is the platform really a blockchain, or is it another type of shared ledger?

Blockchains also face technical questions with respect to resource requirements and scalability. The cryptographic security in a blockchain is met by using a mathematical algorithm that no party controls and is distributed throughout the blockchain. When the algorithm is solved by a majority of the participants, consensus is achieved, and another secure block is added to the blockchain. However, solving these complex algorithms requires large amounts of computing power. For example, the power used in one bitcoin transaction is roughly five times greater than what Visa uses to process 100,000 transactions. This level of computer usage represents a significant energy and environmental cost that cannot be ignored.

Scalability is another significant challenge, as blockchain transactions are very slow to process, especially when you compare them to almost any typical electronic business transaction. For example, a bitcoin transaction can take anywhere from 60 minutes to several hours to process. Because of the distributed nature of blockchains, the time for processing a transaction will only lengthen as more computers are added, resulting in much slower and more cumbersome blockchain transactions. This trait doesn’t fit well with the idea of an agile supply chain.

The application of blockchain technology in supply chain is still in its early stages. The good news is that the technical challenges cited here likely will be solved by advances in engineering and science. The key issue, therefore, will be dealing with the business-process challenges. Once both are addressed, blockchain technology will flourish across the global economy.

Supply Chain Metamorphosis

Tue, 18 Feb 2020 00:00:00 -0600

Life as a supply chain manager has drastically changed over the years. Today’s young professionals would laugh hysterically if they were asked to work the way we did back in the 1980s. In fact, all of us would.

Back then, I was a buyer/planner. I remember walking into the office on Monday mornings and being given a massive green-and-white, pin-fed computer printout. It was roughly 18 inches wide and two inches thick, containing our weekly material requirements planning (MRP) run for all parts within our respective portfolios.

We went through the report meticulously, manually calculating what to order before completing the forms that detailed the production orders. We then submitted them to the master scheduler and, on Friday afternoon, received approval. We spent the last few hours of the day frantically entering orders into the system for the weekend run. This arduous process was just for our internal manufacturing team. Purchasing something from a supplier was an even more ghastly routine. I’m not sure those were the good old days.

In 2018, I attended ASCM’s annual conference in Chicago. One workshop has left a lasting impression on me. My fellow attendees and I discussed change in supply chain. We talked about the importance of challenging old norms, and we wondered, “What is our role as supply chain professionals?”

The main discovery we made was the magnitude of our industry’s role in global business initiatives. Sure, supply chain is inherently concerned with moving products quickly and efficiently. But those of us in this industry also improve the world by getting essential goods to people in remote places. This lesson helped me recognize the significance and complexity of global supply chains — and the need to embrace change.

Change is not an option within a company; it is a must. Industries evolve over time to reflect improved technology and a global economy. Without change, both organizations and individuals risk becoming irrelevant.

I admit that I don’t really like change. I prefer to stay within my comfort zone. However, that workshop has helped me think more granularly about my specific role as a global planner. Yes, it has changed very quickly in recent years. I spend much less time manually placing production and purchase orders, evaluating reorder points, reviewing economic order quantities, and expediting. Instead, I work on complex global improvement projects, stakeholder management, strategy alignment, and customer and supplier relationships. I am constantly looking for ways to improve business processes, and I always keep customers as my primary focus.

While change can be uncomfortable, more often than not, it leads to increased productivity and overall business and personal advancement. Without change, we would still be stuck in the archaic world of massive pin-fed computer printouts. My job today is a lot more fun and fulfilling than it was decades ago. I’m certain countless supply chain veterans would agree.

Have you learned a lesson at work that you would like to share with SCM Now readers? Submit an article of approximately 750 words that teaches, enlightens or amuses to editorial@ascm.org.

Do You Have the Right Mindset?

Fri, 14 Feb 2020 00:00:00 -0600

Each year, companies across the globe spend a whopping $356 billion on employee training, education and leadership-development initiatives. Unfortunately, few of these businesses see a meaningful return on that investment. According to a recent study, this is because organizations neglect a quality that is essential to how people learn, make decisions and conduct themselves — their mindsets.

A Harvard Business Review article explains that mindsets drive what we do and why. They explain why two different people might encounter the same situation, yet process and respond to it very differently. Authors Ryan Gottfredson and Chris Reina write, “When leadership development efforts ignore mindsets, they ignore how leaders see and interpret problems and opportunities.”

Gottfredson and Reina recently investigated research across the social sciences in order to better understand the various mindsets that we possess. They describe them as follows:

Growth versus fixed: Those with a growth mindset believe that people, including themselves, can change their talents, abilities and intelligence. Having a fixed mindset means you think that kind of change is impossible. A growth mindset makes you more mentally primed to approach and take on challenges, give and take feedback, adopt effective problem-solving strategies, and be persistent when working toward goals.

Learning versus performance: People who possess a learning mindset are motivated toward increasing their competence and mastering something new, whereas a performance mindset involves being motivated to gain favorable judgements (or avoid negative judgements) about one’s competence. Those with learning mindsets engage in deep-level learning strategies; tend to perform at a higher level; and are persistent, adaptable and cooperative.

Deliberative versus implemental: If you have a deliberative mindset, you are more receptive to information as a way to ensure that you think and act optimally. Conversely, an implemental mindset means you are more focused on acting on decisions, which may close you off to new and different ideas. People with deliberative mindsets tend to make better choices because they are impartial and accurate in their processing and decision-making.

Promotion versus prevention: A promotion mindset describes an emphasis on winning and gains, while a prevention mindset is depicted by a focused on avoiding loss or preventing problems. The authors note that those with a promotion mindset demonstrate higher levels of task performance and innovative behaviors and are more prone to positive thinking, open to change and likely to persist in the face of a setback.

Mentoring tomorrow’s supply chain leaders

Gottfredson and Reina stress that it is essential for organizations to prioritize development by targeting the four attitudes that enhance our ability to engage with others, navigate change and perform our roles effectively — growth, learning, deliberative and promotion mindsets. The ASCM Case Competition, provided in collaboration with Deloitte Consulting, is a unique opportunity for undergraduate and graduate students to hone these essential skills while testing and enhancing their supply chain knowledge.

The program reaches students at universities across North America, as well as in Africa, Asia, Europe and South America. This week, Case Competition teams are at the regional rounds, working on an end-to-end supply chain challenge drawn from real-world experiences. The advancing teams then will compete for top prizes at ASCM CONNECT, September 13-15, in New Orleans.

I invite you to help ASCM educate, inspire and engage tomorrow’s supply chain professionals by becoming a mentor or advisor. As we continue to face a skills shortage, the Case Competition is an invaluable opportunity to prime the talent pipeline and ensure the next generation of leaders possess a mindset for success.

Use Artificial Intelligence to Improve Reverse Logistics

Thu, 13 Feb 2020 00:00:00 -0600

Many executives have administrative assistants who schedule their meetings, manage their calendars and keep them on task. This frees up the executive to focus on building relationships, come up with big picture ideas and run the company. What if you could hire an administrative assistant to manage your company’s reverse-logistics operations? And what if that assistant was a robot?

Brick-and-mortar retailers are struggling to keep up with online stores because there’s so much overhead associated with a physical store, including employees. Many processes are manual, and technology isn’t integrated as deeply as it should be. This means there are numerous opportunities for brick-and-mortar stores to reduce employee efforts and save money by streamlining and automating processes using artificial intelligence (AI) and predictive analytics.

Predictive analytics is the use of data, statistical algorithms and machine-learning techniques to identify the likelihood of future outcomes based on historical data. Essentially, computers can monitor efforts and processes over time to find patterns and trends and then use those patterns to predict what will happen in the future.

Business owners can then look at those predictions and take action to alter the outcome. For instance, some organizations use predictive analytics to determine whether or not a customer will renew a yearly subscription based on his or her past behavior. If a customer is flagged as someone who won’t likely renew the subscription, sales and marketing teams can double down on efforts to change the customer’s mind before a decision is made.

Many businesses rely on AI and predictive analytics to improve their service, streamline operations and predict customer churn so it can be stopped before it occurs. Stores are capturing and analyzing images of customers to determine the effectiveness of in-store advertisements. Grocers are using machine learning to analyze photos of perishable products to check product freshness and alert employees of products that need to be removed from the floor. Retailers use predictive analytics to determine the likelihood of repeat purchases based on past purchasing behavior.

Although predictive analytics is most often used to predict customer behavior, there are many opportunities to use predictive analytics to improve internal processes, including reverse-logistics operations.

Currently, most companies aren’t spending much time or many resources on their logistics operations. Carriers are called on an as-needed basis when someone from a third-party janitorial crew notes that a container, trailer or dock floor is full. The system is extremely reactive and often unreliable. Store owners don’t always receive confirmation that the pickup was scheduled, nor do they know when a carrier is coming to retrieve the overflowing trailer.

This is even more problematic because many nations are experiencing a transportation crisis. When there is a shortage of qualified workers and equipment, this causes delays in services increased transportation costs. Businesses face accessorial fees if carriers are left to wait at the loading dock, if last-minute pickups are scheduled or if a shipment isn’t ready at the scheduled time.

For this reason, it is essential to optimize dock time and scheduling in all areas of supply chain management. Machine learning and predictive analytics can be especially helpful here. At this point in time, some retailers have installed devices on their containers and trailers that capture pictures of the store’s waste and recycling materials. My company, Sustayn, has developed smarter recycling and waste management systems that incorporate machine learning to analyze the images and learn to distinguish between the various types, improving sorting efforts.

When combined with predictive analytics, these smart waste management systems have the potential to allow businesses to predict when a load will be ready and notify the carrier ahead of time, so a full trailer isn’t left sitting for any longer than necessary. It also guarantees that the load will be ready to go when the carrier arrives to pick it up. This model removes the need for a third-party janitorial crew to be involved. More predictable pickups can be scheduled weeks — not just days — in advance, eliminating the chances of overflow and last-minute requests. Rather than relying on a stressful, reactive process, business owners can take control and create reliable and consistent systems.

Not only would this process limit accessorial fees, but it decreases human efforts, thus cutting costs and reducing errors. The automated notifications also free up employee time by moving low-value work from a person to a machine. Shipments are only scheduled when needed, and the process becomes highly automated.

Companies that have incorporated predictive analytics into their reverse-logistics operations have seen an improvement in service levels with fewer phone calls and reported issues. They’ve also realized freight savings between 5% and 10% by reducing last-minute load requests.

Of course, this is just the tip of the iceberg. There are endless opportunities for predictive analytics and machine learning to be used in reverse-logistics settings. It has the power to streamline and improve transportation planning and help alleviate some of the stress caused by the limited resources of the transportation crisis.

Unlike an administrative assistant, predictive analytics may not be able to make sure your meetings don’t run late, but it can help schedule load pickups, streamline processes and keep your business moving forward, freeing you up to focus on the big picture.

Safety-Shoe Manufacturer Applies S&OP with Form and Function

Tue, 11 Feb 2020 00:00:00 -0600

Small and medium enterprises (SMEs) have an impressive ability to innovate, create and mobilize resources in response to unexpected scenarios. Sometimes, however, it’s difficult to realize the value of change until you’re already in the middle of it. That was the case for Base Protection, a designer and manufacturer of workplace safety shoes headquartered in Barletta, Italy.

Base Protection was launched in 2003 when company founders began developing safety footwear with a brand-new concept: an anti-fatigue element to the shoe’s sole. The ultimate creation, TPU-Skin, was invented in 2005 and immediately patented. The business was acquired by Fegemu S.A. in 2007 and began expanding into European markets. By 2012, the company was selling 12 million euros of footwear annually, and it started exporting to new markets including Saudi Arabia, North America and Russia.

Base Protection is a make-to-stock (MTS) company, so manufacturing strategy and forecast accuracy are crucial. Producing too many unneeded styles will result in an excess of inventory, a lack of storage space for new products and less budget flexibility. Conversely, producing too few styles will of course lead to unhappy customers.

Today’s global marketplace has created all new requirements for businesses aiming to stay competitive, including enhanced cooperation, focus on sustainability and ethics, and long-term business sustainability. Pasquale Muciaccia, operations manager at Base Protection, explains that company leaders therefore wanted to implement a method for reducing fixed costs and obsolescence of product styles, as well as a process for managing and growing their business to stay relevant. They looked to sales and operation planning (S&OP).

The first step in their journey was making sure the rest of the organization would be on board. “At the beginning, it was not so easy to build awareness inside our organization, so we asked for an external expert capable [of introducing] the key insights of the process and the value that S&OP will bring,” Muciaccia explains. Base Protection decision-makers planned a six-month timeframe for the implementation, then created a group to run it, including a project manager, diverse team members and key users.

S&OP: What and how?

S&OP helps make feasible what is promised in a company’s business plan. It goes beyond defining a strategy to sharing it across the organization; monitoring progress; taking corrective actions; and rectifying mistakes as early as possible, rather than discovering and dealing with bad news at the end of the year.

S&OP enables senior management to verify, formally and at least monthly, the progress of the business plan through a deep integration of four functional plans: sales, production, financial and product introduction. The functional plans are managed in their subsequent level of detail (in the case of production, the master scheduling disaggregates the S&OP figures). The process acts as an essential hinge between the business and functional plans. It facilitates consistency with business objectives and acts as a tool for superior decision-making so that the main actors of a business are empowered and involved.

The relevant figures are expressed in product families to show a snapshot of the plan in its entirety. In this way, the product families are highlighted, rather than specific items, which are typically managed inside the functional plans.

However, correctly defining product families is key, and sometimes the marketing and sales product families need to be aligned with production. For each product family, sales and production plans must be prepared, with a planning horizon of 12-to-18 months. Then, the production plan can be updated monthly to ensure an acceptable level of projected available inventory, in the case of MTS companies like Base Protection. This should also be aligned with the financial requirements needed to support the corresponding inventory investment figures.

Next, key decisions are taken to the executive S&OP meeting. In case of process disagreements, the executive team takes responsibility for closing the gap. This process is an effective way to control tactical and strategic choices — such as variations in skills needed, capabilities, workloads, supply constraints, and structural changes in demand and capacity — while following an adequate time horizon. The adoption of S&OP prepares an organization to deal with unpredictable situations; reduce business risks; and focus on the pursuit of strategic goals, greater satisfaction and customer loyalty.

The main goals of S&OP include

functional plans that contribute to the strategic objectives as declared in the business plan and annual budget

a reliable sales plan
a production plan that is executable according to the availability of resources
a strategy for monitoring cash, revenues and profits as projected in the annual budget.

Best-in-class companies excel because they apply these simple, clear, consolidated rules with high commitment, discipline and persistence.

Executive board commitment

Another important aspect is ensuring the S&OP function is a management decision-making process. For this to be possible, the CEO needs to be a strong supporter. Keeping the S&OP process running monthly is vital to maintaining a balance across the business: Sales and operations in the short- and medium-long terms must anticipate and solve problems and enable structural changes.

Top management should determine the balance between demand and supply, including resource utilization, cash flow and profit figures; the company climate; and the attitude for a proactive decision-making process — and share in the effort to integrate the functional plans within the organization. If supply and demand are not in balance, the company may encounter several problems: products not shipped on time, incomplete orders, unsatisfied customers leaving to go elsewhere, insufficient or too much inventory, and so on.

At Base Protection, as at many SMEs, some of the questions asked by management during this stage include:

What will the impact on operations and resource availability be if a major customer contract is signed next month? Which of our resources will be overloaded?

When should we start talking with our major supplier if an increase in volume is expected next month?

What will the financial impact on the income statement be due to this inventory increase?

In this way, S&OP helped top management proactively outline their vision of the future so that plans for sales, operations, resources, product development, finance, and human resources are periodically assessed by leadership. Then, the vision is communicated across the organization for more detailed planning and execution, thereby further strengthening collaboration.

Another typical S&OP implementation issue is failing to get people to commit to the process from the beginning. This damages S&OP credibility. If this happens, investigate to find the root cause. Also take whatever steps are necessary to clearly highlight S&OP’s value to stakeholders. Consider hosting additional workshops, holding awareness sessions, and sharing business cases to create awareness. And be sure the facilitator, whether internal or external to the company, shows up strong and is highly effective.

Information systems

Once the process is mastered by the executive board, it needs to be deployed through a robust information system infrastructure, creating a relationship between S&OP and the enterprise resources planning (ERP) system.

Few companies have fully achieved the potential benefits of ERP. One common reason for this failure is S&OP not running well at the top. In other words, it’s not about the technology, but how S&OP managers facilitate ERP functionalities. An effective upstream S&OP process, that includes information and decision support and planning, is an input requirement for effective ERP.

Real-world results

S&OP must be a top-priority business process for today’s SMEs. It is vital to streamlining supply chain decision-making and optimizing performance, new product initiatives, and bottom-line success. CEO and executive team commitment, as well as a simple and structured information flow, are necessary for achieving the best possible results.

At Base Protection, implementing S&OP brought about numerous positive outcomes. Although, at first, the company struggled with the discipline of the process (such as scheduling and keeping regular meetings and managing time during the executive S&OP meeting), once those components were in place, the company was able to derive considerable value.

After the planned six-month launch period, the executive team at Base Protection decided to further improve forecast accuracy by lengthening the time horizon for its MTS environment from six months to one year. Muciaccia says that, once they accomplished that goal, Base Protection was able to “better manage plant capacity, anticipate demand variation more accurately and increase service levels.”

Another benefit was on the logistics side: Because of the increased accuracy in volume sales and production rates, Base Protection could cut transportation costs and decrease rush deliveries.

Today, the company’s S&OP plans are still expanding, Muciaccia says, adding that current goals include a time horizon of 18 months. To achieve this objective, Base Protection involves a cross-functional team from numerous different departments.

Muciaccia strongly recommends that all SMEs put in the time and effort to create a strong S&OP process, as this makes it possible to align the organizational behaviors and functional objectives with overall strategic goals while balancing demand with supply. As he puts it, S&OP is “a great tool for business continuity in the current turbulent environment.”

Upskilling Supply Chain Professionals for a Sustainable Future

Fri, 07 Feb 2020 00:00:00 -0600

This week, I attended the GreenBiz 20 conference, which enables sustainability-focused professionals to explore business trends and develop recommendations for better organizational accountability and reporting. Those of us who participated in the supply chain track identified a number of tactics for aligning sustainability goals with supply chain activities. Two key strategies were enhanced cross-training and ongoing professional development.

Indeed, as global supply chains contend with extreme social, economic and ecological change, investing in our people becomes ever-more crucial. As World Economic Forum (WEF) President Børge Brende writes, “Valuing human capital not only serves to equip individuals with the knowledge and skills to respond to systemic shifts, it also empowers them to take part in creating a more equal, inclusive and sustainable world.”

According to the WEF’s Future of Jobs Report, 75 million jobs in 20 major economies will be displaced by 2022. Meanwhile, as many as 133 million new roles will emerge to meet the demands of this ongoing transformation.

These points are underpinned by PwC’s 23rd Annual Global CEO Survey, which reveals the opinions of about 1,600 chief executives from 83 countries. Two central themes that surfaced from the research were upskilling and climate change.

According to the report, the key forces driving the upskilling imperative include automation, less availability of talent, reduced mobility of skilled labor and the aging workforce. “One reality is clear,” the report states, “increases in automation, changes in demographics and new regulations will make it much harder for organizations to attract and retain the skilled talent they need to keep pace with the speed of technological change. They will have to grow their own future workforce.”

Importantly, the CEOs who have embraced upskilling report benefits including stronger corporate culture and employee engagement, greater ability to attract and retain workers, heightened levels of innovation, and enhanced productivity.

“Our current approach can’t continue,” Siemens U.S. CEO Barbara Humpton told PwC. “We don’t have nearly enough qualified applicants to hire because of the technical knowledge required. So we’re going to be training a lot of non-engineers to do jobs engineers would have done in the past.”

The CEOs surveyed also recognize the risk and opportunity of climate change, noting that related initiatives can lead to significant new product and service opportunities, as well as reputational advantages and financial incentives. A recent CNN article validates these findings, reporting that asset-management superpower BlackRock is putting sustainability “at the center of its approach to investing.” The firm currently oversees $7 trillion in investments, but soon will abandon any holdings considered to be a sustainability risk.

“Awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance,” CEO Larry Fink stated in his January 2020 letter to CEOs.

The potential of our people

Today’s investments in talent set our supply chain organizations on an equal, inclusive and sustainable path to the future. At ASCM, we are here to support you in this effort, with a wide array of professional development programs, including APICS certifications and a body of knowledge that has been the global standard in supply chain learning and development for more than 60 years.

Companies around the world recognize the APICS Certified in Production and Inventory Management; Certified Supply Chain Professional; and Certified in Logistics, Transportation and Distribution designations. These credentials offer forward-looking, transformational education that will position your employees for ongoing success. Learn more about how you can cultivate and support your workforce with this essential learning and development.

5 Ways to Improve Warehouse Operations with Autonomous Mobile Robots

Thu, 06 Feb 2020 00:00:00 -0600

The market for autonomous mobile robots has proven to be quite dynamic. The barriers to entry are rather low from a product development perspective, but the barriers to success are quite high. For this reason, experts expect that the warehouse landscape will look significantly different in the near future as more companies overcome these barriers.

Today, this market is made up of robots that can autonomously navigate a warehouse; transport a variety of payloads; and be aligned with business applications, such as warehouse management and warehouse execution systems, that are responsible for orchestrating the movement of materials. And although warehouses come in different shapes and sizes and have varying purposes, all of them have some requirement of material movement, which makes autonomous mobile robots a key asset for any warehouse.

Here are five ways autonomous mobile robots can help improve warehouse operations.

Autonomous mobile robots help close labor gaps. The worldwide market for warehousing space is in a period of healthy growth as demand for goods and services worldwide increases because of global population growth and strong economies in major markets. However, the labor markets in the United States, Japan, China and many parts of Europe cannot keep up with this growth. This is one of the driving forces behind the push to automate warehouse operations. The use of autonomous mobile robots enables warehouse operations to scale on demand; redeploy human workers to more valuable tasks; and reduce the risk related to reliance on short-term, seasonal labor.
Autonomous mobile robots help improve warehouse safety. According to the Occupational Safety and Health Administration, more than 11 percent of forklifts, which are driven by humans to move materials within a warehouse, will be involved in an accident. With autonomous mobile robots taking on material-handling responsibilities, the amount of forklift accidents can be reduced.
Autonomous mobile robots reduce human error. Because autonomous mobile robots are not operated by humans, the human error element related to workplace accidents is eliminated. Instead, these robots leverage advanced vision systems and sensors to sense their environments and respond to changes in real time. Plus, they are built under strict safety guidelines and designed specifically with safety in mind.
Autonomous mobile robots support digital transformations. Many, if not most, organizations are engaged in some degree of digital transformation or modernization efforts. Autonomous mobile robots can provide a mechanism for warehouse managers to autonomously capture data about the movement of materials and inventory utilization. In addition, the option of integrating autonomous mobile robotics technology with operations-level systems, such as warehouse management and warehouse execution systems, can support the alignment between the physical execution of tasks and the digital footprint of the operation.
Autonomous mobile robots can be implemented without disrupting operations. Many of today’s leading vendors have developed highly flexible systems that can be deployed into an ongoing operation without the need to change the configuration of a facility or engage in infrastructure change. This is especially important for smaller, regional warehouses that typically cannot accommodate operations disruptions but do not have the financial capacity to invest in building out new facilities or implementing full-on automation. Autonomous mobile robots can easily be installed and deployed because they are a type of flexible automation that is not constrained by the layout of a facility, like conveyors or sortation equipment might be.

Keys to successful implementation

For organizations considering utilizing autonomous mobile robots in the warehouse, the following guidance can help to drive strategic decision-making:

Do your due diligence. Evaluate the state of the market for vendors, and work with a few candidates to understand how they perceive the value proposition, where they have deployed and what level of value has been delivered to their customers.
Consider autonomous mobile robots as a tool designed to improve the capabilities of your workers. These devices perform a task but do not necessarily do all of the things that your people can do.
Engage your workforce in the process. There is an understandable concern about the use of robots and the impact on employment. Be upfront with your workers and take their inputs during the early stages of planning.
When building out your digital transformation or modernization strategy, think about the value of data relative to the physical execution of the tasks within the warehouse operation. Craft a strategy to improve the data footprint through the use of autonomous mobile robots as a data-generation mechanism.
Start small. You can start with this technology on a small scale and build from an initial deployment, implementing autonomous mobile robots where it makes the most sense.
In addition, you can choose a robot-as-a-service model that reduces the risk associated with using the technology and also improves your ability to dynamically scale your fleet.
Do not let preconceived notions about the complexity of the technology get in the way of taking action. Overall, this technology is exceptionally user friendly.

Play to Their Strengths

Tue, 04 Feb 2020 00:00:00 -0600

Editor’s Note: We are pleased to welcome Janet Duckham, chief supply chain officer at Captain D’s, to the pages of SCM Now magazine. Duckham leads the company’s purchasing efforts, oversees quality assurance, and manages distribution and logistics processes for 540 restaurants in 22 states.

As executives, we all rely on others to make positive contributions to the organization. However, sometimes people fall short. As leaders, it may be tempting to just say, “Well, they can’t do it,” or “They don’t get it.” Instead, I suggest looking in the mirror and asking, “How can I foster an environment in which this person can excel?”

I’m of the opinion that 99% of people want to do a good job. Some of them just need help unlocking their potential. Creating clear expectations, establishing accountability and providing constructive feedback is a three-step process that can be applied to all aspects of people development.

Start with Expectations

The first step is simply asking each person on your team if they know what they are supposed to do. Find out if they understand what specific contributions they are expected to make and how they will be evaluated. This provides insight into how they see their impacts and value to the organization. Many times, there is a disconnect between what your expectations are and what they think your expectations are.

I grew up playing sports and have applied many of my experiences to what happens every day at work. Whether an individual or team sport, there are situations that build commitment and character. On a team, typically each player has a specific responsibility: For example, a point guard is the floor general and runs the team on the court. We would not expect the center to be handling those responsibilities, as that is not the expectation of that role.

Accountability is the strength of discipline

Lack of accountability leads to mediocrity, which is unacceptable. Accountability starts with setting goals. Goals, in turn, bring about a proactive focus. Set goals with your team members’ involvement, as people are more invested when they are part of the process. There are numerous ways to do this, but the SMART method works and is easy to execute. SMART goals are specific, measurable, achievable, relevant and timely.

Explain how goals can be achieved using an action plan or roadmap. Develop a scorecard and establish performance indicators that will be used to measure the results. Finally, remember that everyone works differently, so let go of how you would reach the end result. You may even learn something from watching a new approach.

The importance of feedback

Giving feedback is all about creating self-awareness. If team members are under-performing, managers must confront the problem by providing timely and constructive feedback. This also helps motivate employees to go beyond mere compliance (“I have to do this”) to true commitment (“I want to do this, and I care about the results”). Commitment is a key building block of an engaged culture.

According to “Bringing out the Best in Others” by Thomas K. Connellan, there are three types of feedback: motivational, informational and developmental. Motivational feedback focuses on behavior and is intended to accelerate someone’s potential. To reinforce the behavior you want more of, compliment it. This kind of positive recognition builds self-esteem and leads to greater results. To correct the wrong behavior, use negative feedback. This is not a punishment. Simply deliver the message — hard on the process, soft on the person. Remember, providing no feedback at all is worse. It can be a silent assassin. Finally, be specific. Asking, “How is my team doing?” is less valuable than, “Is my team getting you what you need within two hours?”

Informational feedback is the roadmap to success and therefore must be goals-focused. The most effective informational feedback is immediate and matches the behavior. Again, the assumption is that people want to do a good job. Hence, highlighting the results of their efforts has a high probability of improving future performance.

Developmental feedback is a method for making corrections. First, define the issue and describe performance. Avoid pointing out problems or asking why they happened. Instead, inquire as to how things can be improved and what is needed to make those improvements. As your team members come up with solutions, they will buy in.

Unlock the potential in your team by keeping these strategies in mind. When you spend more time on what is right, you will bring out the best in others.

Coronavirus Outbreak Amplifies Pharmaceutical Supply Chain Risk

Fri, 31 Jan 2020 00:00:00 -0600

The number of reported Coronavirus cases has surged to more than 10,000, with the death toll rising to 213. The New York Times’ Chris Buckley, chief China correspondent, reports from the epicenter of the outbreak: “It may be difficult to envisage just how thoroughly people have retreated from the streets and from public life. ... A lot of them wonder how long the shutdown can last. Even now, people are worrying about the jobs they may lose, the businesses that will close.”

Buckley goes on to say that many of those he talks with “erupt with a kind of anger and exasperation” over the fact that they had no idea how dangerous the pathogen was until their cities — including Wuhan, Shanghai, Suzhou, Huanggang and more — were literally shutting down.

As the virus extends across China and unnerves the rest of the world, pharmaceutical supply chains seem to be experiencing the greatest impact. According to the FDA, China has 15% of the world’s facilities manufacturing active pharmaceutical ingredients for 370 essential drugs.

Michael Osterholm, director of the Center for Infectious Disease Research at the University of Minnesota, delivered a stern warning to health care and pharmaceutical supply chain organizations on CNBC’s The Exchange: “Many of the critical products we use every day, such as medicines and medical devices, are actually manufactured in China’s areas being shut down. … Every company that has any manufacturing capacity in China right now better be looking very carefully at their supply chains.”

Osterholm emphasized that the outbreak is going to have an impact on the global supply of critical products “within days to weeks.”

Rosemary Gibson, a health care and patient safety expert at bioethics nonprofit The Hastings Center, says reliance on ingredients from China is worrisome. In her book, China Rx: Exposing the Risks of America’s Dependence on China for Medicine, she writes: “All it takes is for one ingredient plant to cause a problem in the near term. The production of some medicines depends on one supplier. This is why long supply chains for critical products should be rethought. … If you have a supply chain concentrated in a single country, no matter what country it is, that’s a risk of epic proportions.”

A wide range of risks

Reginaldo Montague, CFPIM, CSCP, writes in SCM Now magazine: “The pharmaceutical supply chain stretches around the world like a rubber band wrapped around a ball. The smallest fault in any segment of that rubber band challenges the integrity of the whole and could lead to catastrophic failure of the entire system.”

He explains that, not long ago, the drug supply chain was more localized and therefore far less complex. However, now that active ingredients are sourced from multiple global organizations, the pharmaceutical supply chain contains a wide range of risk profiles.

ASCM’s Risk Management Certificate is a comprehensive, forward-looking program that will enable you develop a powerful supply chain risk mitigation strategy for your business. The education explores how to effectively assess risk, explains governance and compliance, provides an enterprise risk management framework, defines proper organizational structures, and much more.

Take the first step toward earning your certificate and mastering supply chain risk management today.

How Industrial Real Estate Owners Can Meet Evolving E-Commerce Needs

Fri, 31 Jan 2020 00:00:00 -0600

Now that we are in the midst of the Fourth Industrial Revolution, the world is changing rapidly in the face of exponential innovation that will permeate every facet of life. The way we do business and interact with each other is undergoing a shift not seen since the first Industrial Revolution. New technologies — such as the internet of things, artificial intelligence and robots — are changing the way companies operate. At the same time, consumer expectations for customized products, product transparency and fast delivery are putting increased pressures on supply networks.

This shifting ecosystem is forcing a strategic shift in how companies operate and is challenging historically successful network distribution footprints. Traditional logistics networks have long relied on large industrial warehouses, strategically placed using advanced linear programming models to balance service levels in key markets with an optimized total cost to serve. This hub-and-spoke model still is widely used today.

New research from our colleagues at the Deloitte Center for Financial Services is providing a good picture of the immediate future for industrial real estate. The team forecasts that double-digit e-commerce sales growth will drive approximately 850 million square feet of industrial real estate demand between 2019 and 2023. However, industrial real estate’s pace of growth is forecasted to slow to nearly half of 2018 levels. Although the need for these large distribution centers remains, where they are located, how they operate within their four walls and the role they play in the broader digital supply network are changing.

The takeaway is that industrial real estate property owners should focus on innovation, such as creating more efficient, accessible and smart spaces, and on securing warehouses close to population hubs. Tenants and consumers alike want technologically advanced warehouse facilities in locations that enable same-day and next-day delivery.

From there, the requirements for how a supply network needs to operate can be fundamentally altered through investment in advanced warehouse management; transportation execution solutions; and a workforce that can be digitally augmented, such as by using robots to assist with outgoing deliveries and returns processing. In certain industries, the concept of black-out warehouses — meaning that the facility’s workforce is all robots, which do not need lights or other utilities — are in full operation. Finally, predictive analytics capabilities can improve sales forecast accuracy, customer profiling, ensemble modeling and future demand scenarios.

The world of commerce is changing rapidly to meet the new frontier enabled by disruptive and digital technologies, fueling growth and investment in the digital supply networks of the future. This means that, instead of being part of static and linear supply chains, companies will participate in interconnected ecosystems of nodes that can dynamically shape the planning, production and distribution of products. Looking ahead, producers, suppliers, industrial real estate owners, logistics service providers and operators all need to evolve to be more agile to keep up with the rapidly changing business environment.

Easy Inventory Management Tweaks That Will Impress Your Boss

Wed, 29 Jan 2020 00:00:00 -0600

If your boss is like most, they are probably impressed by measurable results, such as the dollar value of cost cuts and percentage increases in efficiency. When managing indirect inventory in a manufacturing facility, though, it can sometimes seem that significant, measurable changes require a major effort, such as months of meetings seemingly involving everyone from the security guard to the chief financial officer and an elaborate rollout plan.

You probably don’t have the time for that. But there are a few quick and simple adjustments you can make that will lower costs and improve efficiency:

Segment your inventory. The vast majority of your indirect supplies can be categorized into one of four buckets, based on their cost and usage, namely

high-cost and high-use inventory
low-cost and high-use inventory
low-cost and low-use inventory
spot buys.

Managing all of these buckets of inventory the same way is a recipe for excess costs. Instead, think strategically about how best to manage each category.

For high-cost, high-use items, maintain strong controls. This means ensuring that you keep enough of these items in stock but also preventing unnecessary usage or early reorders.

You shouldn’t spend a lot of time managing low-cost, high-use items. As much as possible, make these items available when and where needed to keep production moving.

Low-cost, low-use items are susceptible to being over-inventoried. Maintain minimal inventory levels and reorder only when needed to avoid overspending.

Spot buys cover items that you don’t keep in inventory. For these orders, you need an efficient process and reliable supplier with the maintenance, repair and overhaul supplies that you need when you need them.

Balance centralized inventory with point-of-use storage.

With your inventory properly segmented, you can look at where things should be stored and managed. Many facilities store everything in a central crib, but there’s a problem with this. Workers often end up taking more of the frequently used items than they actually need in order to avoid time-wasting trips. This means employees are hoarding inventory, which can distort records and require frequent reordering. Imagine you have just five operators hoarding three weeks of inventory. Pretty soon, you’ll be ordering too much, spending more than you have to and wondering why.

Consider managing high-cost, high-use items with a vending machine near operators’ work stations. This makes the items easily accessible while maintaining accurate inventory records and accountable usage allocation control.

It may not be worthwhile to store low-cost indirect inventory in a centralized crib because of the associated inefficiency and cost. Instead, making these items easily available in a convenient location — or multiple locations — may be more efficient.

Secure the crib. When numerous employees need inventory from a crib, it is tempting to make the crib semi-secure and rely on associates to fill out inventory forms and keep records updated. But more often than not, workers going to that crib are focused on getting what they need and getting back to work. Soon, a wide discrepancy between what’s in the crib and what inventory records show develops.

Inaccurate records create other problems. Inventory may run out and be unavailable when needed, even though the business system shows it to be on hand. This can cause production slowdowns. Associates may stop relying on what’s in the crib, hoarding extra inventory at their work stations because they can’t be confident they’ll find what they need. Again, this can spur early reorders and create excess inventory levels.

Fully secure the crib, by tracking inventory with automated tools, to optimize inventory levels and better manage costs. What does a fully automated, secure inventory crib look like? Here’s an example: When an operator or maintenance worker needs something from the crib, they request the item from the crib manager. The crib manager removes the item from stock; scans the bar code to automatically update inventory levels; and then either gives it to the worker or, in some circumstances, delivers it to the appropriate workstation. The technology and extra labor have a cost, of course. But in the long run, such systems save much more money, creating a net gain for the facility.

Control your indirect costs using these three easy tweaks. Your boss will surely like the measurable results.

What Can Machine Learning Do for Your Supply Chain?

Tue, 28 Jan 2020 00:00:00 -0600

With all the fanfare surrounding machine learning, people are often surprised to learn that it has been around since 1959. This was when Arthur Samuel, a gaming and artificial intelligence (AI) engineer working for IBM, coined the term to describe the concept behind his revolutionary invention: a self-learning, checkers-playing program. Machine learning is a type of AI that enables computers to become smarter by performing tasks without any explicit programming.

The machine learning golden era is here, with affordable processing power, in-memory storage and an abundance of data driving mainstream adoption. The most important factor behind this machine learning revolution may be the unassailable business need. In the world of supply chain, escalating supply, distribution, sales channels and demand complexity make it increasingly difficult to plan accurately. Meanwhile, industry professionals are grappling with relatively new phenomena that create variability, including fast fashion and other types of hyper-seasonality, shorter product introduction cycles and the impact of social media. And wildcards such as extreme weather, stock market fluctuations and socioeconomic volatility add to the difficulties. Machine learning augmentation is ideal for alleviating the headaches associated with many key processes.

Six strategies for success

Following are six ways supply chain professionals can ensure machine learning drives desired business benefits.

Set clear objectives at the outset. When you learn about other companies’ success stories (see sidebar), it’s tempting to want to just dive in. However, the scientific and iterative nature of machine learning calls for it to be implemented methodically. Create a clear charter of what you want to accomplish and why. This should include establishing baseline metrics so you can track how your machine learning application is performing.

Gather the necessary data to accurately compare previous results to those enhanced by machine learning. This is the best way to gain confidence in your initiative. And because machine learning systems get smarter over time, having a consistent measurement method is essential to tracking return on investment and outcomes. Consider making this a part of your sales and operations planning (S&OP) effort.
Embrace probability forecasting. After you’ve established project objectives, it’s time to build a solid foundation for a successful and sustainable initiative. Probability forecasting is most compatible with machine learning because it enables planners to forecast at the most granular level and on different time horizons. It also helps people understand the range of possibilities of demand in the forecast.

This method is ideal for supply chains that include a high number of long-tail items and face demand variability and uncertainty. Using this approach, you still get one number that’s associated with the most probable outcome. However, banded around this number is a range of other possible outcomes, each with a different probability.
Walk before you run. A phased approach helps ensure a sustainable machine learning solution that meets business objectives today and as needs change. This starts with establishing an adaptive, probability-based model for demand forecasting using existing historical data, then layering in more sophisticated machine learning using external data sources. A reliable demand forecast is critical to success with advanced machine learning and yields significant benefits on its own. Following is a typical progression of the phases a company goes through in modeling and applying data:

Phase one involves the organization building a self-adaptive model for probability forecasting, taking into account trends, seasonality, calendars and daily sales patterns. “Small data” is used to create a baseline self-learning model for probability forecasting using historical demand history.

Next, the impact of marketing activities — trade promotions, media events, product introductions and so on — is factored in. This improves the baseline probability forecast by applying machine learning technology to existing historical data.

In this external demand-sensing step, the business looks for additional correlations by introducing external and big data sources, such as weather, point-of-sale information, social media and machine-generated data.

In the final stage, specialized business knowledge is introduced from experts across sales, marketing and operations. Again, this information often emerges through the S&OP process. This is also the time to introduce external market intelligence into the model.

It can be tempting to go straight to the external demand-sensing in phase three. However, an iterative approach is the best way to determine which data is meaningful and to what degree. It also gives you the opportunity to change course based on what you learn along the way, drawing out correlations with each step.
Remember the four dimensions of data:

Data volume. Big data plays to the strengths of machine learning. It is essential to have the right amount of data to draw upon, from which the model can derive statistical significance. Don’t overlook “small data” related to historic demand.

Data granularity. Unlike approaches where data is aggregated to weed out noise, machine learning thrives on granularity, examining that noise and using it to find correlations that train the model and make it more powerful.

Data quality. As the saying goes: Garbage in, garbage out. Unfortunately, while machine learning can determine if a specific data stream has a correlative significance, it cannot tell whether that data is reliable. Therefore, machine learning projects usually include governance programs to clean, filter and maintain information quality through the data life cycle.

Data variety. The more different types of data sources you factor in, the more robust and accurate the planning outcomes can be.
Operationalize your machine learning tool. Often, businesses will build a machine learning solution to tackle a one-off business challenge without considering its long-term worth. For sustainable business value, operationalize your results.

To achieve the stability and adaptability required for operational use, use models that are self-adaptive and do not require continuous tuning by experts. Otherwise, changing business environments will make them unreliable. This is common with traditional demand planning processes that use multiple forecasting algorithms assigned to each item or location according to the demand behavior. The forecast generated by these algorithms degrades as the demand patterns evolve over time. Discrete selection and tuning of algorithms require human skills that most businesses cannot afford. One-off science projects create black boxes that only the developer can understand and support. Users remain skeptical, and, if the developer leaves the company, these models are shelved or discarded altogether. Isolated machine learning projects also require continual manual work to refresh the model when business needs change. The better method uses a self-adaptive model as part of a fully integrated solution, with frequent models updated automatically to react to changes.
Get the right people on board. Machine learning frees up planners to do more value-added, strategic work. As your business changes over time, you’ll have new questions to answer and will need to adjust your existing models so they remain accurate and useful. It’s critical to understand the needed skills and resources before kicking off the project.

Human-machine symbiosis

Part of a supply chain professional’s strategic work is applying domain proficiency. Machine learning can only do so much; business knowledge and process expertise are required to fine-tune models and maximize results. The system will get smarter over time as it factors in human input, and humans will get smarter by learning from the success rate of the probability forecasts. This enables employees to focus on service, work on strategic projects and add their business insights to the system.

Three real-world machine learning applications

Heating and cooling systems provider Lennox Industries faced the challenge of managing an ambitious North American distribution network enlargement while transitioning to a hub-and-spoke model with 55 shipping and 161 selling locations. Company leaders wanted to improve service levels and optimize inventories in order to reallocate working capital and balance inventory in the changing network. But the supply chain environment was daunting, with a multi-echelon distribution network about to grow by 250%, 450,000 stock-keeping unit (SKU) locations, many slow movers and new product introductions.

Lennox implemented a transformational supply chain planning solution to dynamically rationalize the inventory mix and design an operational plan that sets inventory stocking targets and balances service levels with inventory cost. Machine learning enabled the business to reliably model highly variable seasonal demand patterns. It sifts through hundreds of thousands of SKU locations to identify clusters of similar seasonality profiles.

This has substantially increased peak period forecast accuracy. In addition, service levels have improved by 16%, inventory turns have increased by 26%, and Lennox is now able to support a significant growth in both sales and market share.
Dairy industry supply chain planning is particularly difficult because products have short shelf lives and demand varies greatly in response to promotions. The Italian dairy producer Granarolo runs thousands of promotions annually, producing 34,000 item-promotion forecasting combinations and causing demand peaks of up to 30 times baseline sales. Its complex supply chain environment is comprised of eight production plants, six logistics technology platforms, 35 transit depots holding inventory, a large fleet of refrigerated vehicles and about 750 merchandisers servicing daily sales. A network of 100 wholesale distributors covers other local markets.

Granarolo uses advanced planning software with machine learning to optimize the demand plan for perishable products. The software also identifies exceptions and optimizes inventory and logistics to meet demand and minimize waste. Average forecast reliability has grown from 80% to 85%, peaking at 95% for fresh milk and cream and 88% for yogurt and dessert products. Inventory levels and delivery times have been halved, resulting in fresher products and less waste. And Granarolo is enjoying significantly better customer service levels and lower transportation costs.
New demands posed by a British luxury car manufacturer’s client base prompted its board to raise targets for first time availability (FTA) by 2% without increasing inventory. For the first time, the board also wanted to achieve FTA parity across all three of its car categories: heritage (pre-1997), recent production (mid ‘90s forward, but no longer in production), and current (today’s models).

The company uses advanced machine learning to analyze historical data on consumer behavior to better anticipate customer needs. The tool dips into the company’s vast store of historical data and finds eight completely new categories of behavior. The software then uses these new categories to generate a more accurate forecast. Each day, the machine learning engine tunes the safety stock for 80,000 SKUs, automatically reducing inventory before creating a replenishment plan to deliver the demanding new target service levels.

After only two months, the car manufacturer reduced the inventory value of its safety stock on the clustered items by 18% and raised FTA service levels to 97.1%. Outcomes continue trending toward significant further improvements in both service levels and reduced inventory.

Seek Out These 10 Qualities for Ongoing Career Success

Fri, 24 Jan 2020 00:00:00 -0600

Do you know which skills are most vital to your professional future? More importantly, do you possess them?

According to the new World Economic Forum (WEF) report, “The Future of Jobs,” the top 10 proficiencies and workforce strategies for 2020 and beyond are

complex problem-solving
critical thinking
creativity
people management
coordinating with others
emotional intelligence
judgement and decision-making
service orientation
negotiation
cognitive flexibility.

These findings were derived from chief human resources and strategy officers at leading global employers. The executives were asked about current shifts in business and what they mean for employment, skills and recruitment across industries and geographies.

“By 2020, the Fourth Industrial Revolution will have brought us advanced robotics and autonomous transport, artificial intelligence (AI) and machine learning, advanced materials, biotechnology and genomics,” says WEF senior writer Alex Gray. “These developments will transform the way we live and the way we work. Some jobs will disappear, others will grow, and jobs that don’t even exist today will become commonplace.”

Although AI tackles many challenges that people cannot, machines are less likely to decipher complicated puzzles that are not clearly defined or span multiple industries. This is why complex problem-solving tops the WEF list. Likewise, critical thinking is a strictly human capability that enables us to process, visualize and make connections in a world of ambiguity and nuance.

With the constant influx of new technologies, it’s no wonder that creativity is among the top three skills. “Robots may help us get to where we want to be faster, but they can’t be as creative as humans,” Gray explains, adding that negotiation and cognitive flexibility are at the bottom of the list because machines are increasingly making our decisions for us. In fact, 45% of WEF survey respondents believe AI will sit on company boards of directors by 2026.

“The future workforce will need to align its skillset to keep pace,” Gray writes. “Change won’t wait for us: Business leaders, educators and governments all need to be proactive in upskilling and retraining.”

The next five years

Something I found particularly interesting while reading the WEF report was the comparison between today’s top 10 and the list from just five years ago. While many skills were fairly comparable, others shifted dramatically (creativity). Some appeared for the first time (emotional intelligence and cognitive flexibility), and some fell off the list altogether (quality control and active listening).

Why Traceability in Manufacturing Matters More Now than Ever Before

Wed, 22 Jan 2020 00:00:00 -0600

When operating an efficient product supply chain, every component matters. The ability to track each piece from its origin at the supplier’s facility to its final delivery to customers should no longer just be a benefit or add-on service. It is a necessity. With an even greater focus on quality control and compliance across the manufacturing sector, as well as increased customer scrutiny of how raw materials are sourced and processed, traceability is more important than ever.

Because of its criticality, traceability needs to be a part of everyday operations. Companies should not only track individual components and products but also critical information such as details about suppliers and the products or inputs they provide, details about customers and the products supplied to them, the date of every transaction or delivery, the batch or serial number for each stock keeping unit, quality records for every component or batch, and the volume or quantity of every batch.

For companies that do not have dedicated traceability tools and processes in place, dealing with traceability queries can be time-consuming. In some cases, the inability to show evidence of origin or use can quickly escalate into a more pressing business issue. As such, having the ability to track components both forward and backward across the supply chain can eliminate unforeseen issues and save time and money.

Traceability also can help with inventory management and operations planning. Having the ability to trace fluctuations in raw materials, to understand when a machine part is coming to the end of its life, and to monitor the quality of parts and materials from specific suppliers will enhance every level of the supply chain. It’s safer and more efficient in the long run to make decisions based on solid facts and data as opposed to estimates.

Catering to customers

Once a product leaves a factory, traceability plays a key role in customer satisfaction. First, consumers care about product origins. They want to know where products come from, who makes them and how they are made. This is especially true in the food manufacturing sector, which has come under greater scrutiny in recent years. Being able to provide this detailed information can satisfy consumers’ curiosity and, in some cases, alleviate concerns about practices that can harm the environment or that are unethical.

In many sectors, consumers are turning toward more sustainable options as their concerns for the environment grow. Since 2016, 65% more consumers have avoided buying a product or using a service because of its environmental impact, according to the 2018 market report by Ethical Consumer.

More importantly, consumers want to know that the products they purchase and consume are safe. In the food and beverage industry, products frequently are recalled for a variety of reasons, including contamination by other foreign objects, such as metal or plastic debris from the machinery used to make, process or package the products or remnants of equipment-cleaning fluid, or foodborne bacteria. A recall event will certainly sour sales, even if just in the near-term, and likely will alter consumers’ perceptions of the brand.

However, having the proper traceability tools and protocols in place can save a company’s brand image when a recall event occurs. In fact, the benefit is at least twofold: the recall will be more targeted, which means discarding only the affected products, and consumers will be impressed, or at least calmed, but the company’s quick response to the issue.

Don’t be the kink in the supply chain

Traceability also helps with pleasing supply chain partners. Enhanced visibility enables quick turnarounds, increased attention to customer needs and competitive pricing.

Attention to product performance further down the supply chain also can help protect the reputation of all members of the supply chain. If one company institutes a cost-cutting measure or starts slacking off on quality assurance, traceability will help identify issues caused by these practices and empower supply chain players to quickly resolve the problems. Ideally, every company should ensure that it has the relevant technology and platforms in place to provide the ability to quickly recall products, track production and match replacement parts. Pair this ability with a solid crisis management contingency, and you will be prepared for all scenarios.

Make Unplanned Spend a Problem of the Past

Tue, 21 Jan 2020 00:00:00 -0600

Unplanned expenses are a fact of business. Something unexpected will happen, which results in a last-minute purchase, known as spot buying, to resolve the issue. Although some unplanned spend is acceptable — and even important — as occasional exceptions, especially when planned for in the budget, it cannot become the norm.

Spot buying is a reactive approach that usually means something has been missed or isn’t covered under a company’s procurement strategy or strategic sourcing plans. This could be attributed to changing market conditions, purchases required just to keep the wheels turning, or potentially a lack of good communication about actual requirements between the procurement team and end users. A number of organizations use spot buy catalogs to cover these requirements.

The problem with spot buying is that it is nearly always a rushed or hasty purchase. This might mean that a normally low-priced item could end up costing the company a significant amount because it is purchased on short notice and outside of negotiated bulk discount arrangements.

In some cases, in order to ensure that requirements are met, organizations issue purchasing cards (p-cards) to employees for those snap purchases. Used correctly, p-cards can enable savings, rebates and discounts as well as help pay suppliers faster, according to NAPCP, the professional association for the commercial card and payment industry.

But with spend on p-cards reaching an eye-watering $350 billion per year, according to a 2018 report from Treasury & Risk, there is a definite argument that procurement should strongly consider bringing this spend back under contract and aim for cost reduction and consolidation.

Planning for the unexpected

To convert the majority of unplanned spend to planned spend, procurement teams need to get ahead of the problem with a bit of research. Purchasers must understand what purchase categories have required unplanned spend in the past, identify repeat offenders and formalize a proactive approach to this spend that can be added to procurement’s strategic buying activities to unlock savings and reduce overall spend.

Of course, this is easier said than done, and any team attempting this task will face challenges. First, they may experience opposition from purchasing managers. Prying p-cards out of their hands will certainly be much more difficult than taking candy from a baby. But with some coaxing, a solid argument about why this needs to happen, and a change management strategy, this challenge can be surmounted.

A second challenge is obtaining good data and data analysis. Having spend analytics is one thing, but the data output is only as good as the data input. If there is resistance to change and a lack of communication from those making the unplanned spend, then no level of data analysis is going to help because the inputs will not be good enough. However, once upper-level managers have resolved this issue, the use of high-quality procurement solutions can assist with data analysis and give the company more tangible and useful information to work with.

Third, companies likely will need expert help to apply the data analytics. This is where group purchasing organizations (GPOs) can help. GPOs use their collective buying power to unlock bulk discounts for all participants. Think of it as a Groupon for businesses. Some also have experts that offer industry insights, benchmarks and analytics and can help companies identify savings opportunities, optimize product standardization and utilization, and cultivate excellent relationships with suppliers. Consider partnership with a GPO to address areas of frequent unplanned spend by instead making planned purchases through the buying community. By leveraging their collective knowledge and expertise, GPOs may be just the right resource to help take the strain off your resources.

What Young Professionals Should Know about Blockchain

Mon, 20 Jan 2020 00:00:00 -0600

In the past few years, experts have increasingly touted the benefits of blockchain in supply chain. Numerous high-profile tests have piloted the technology to support greater supply chain transparency. But is blockchain really going to be as revolutionary as experts promise? And will it affect supply chain professionals’ roles? To find out, I connected with David Bambuck Bien-Aimé, Blockchain Guru’s Montreal-area regional director, to learn more about the company’s efforts in the supply chain field. Blockchain Guru is a Calgary, Alberta-based consulting and software development firm.

Although Bien-Aimé’s background is in management, marketing and e-commerce, the company has given him opportunities to participate in several innovative projects related to big data and the digital world, as well as help Quebec-based corporations learn more about and adopt emerging blockchain technology. The company’s CEO and Chief Guru Jon Trask, CPIM, CSCP, CLTD, is a supply chain professional with more than 25 years of supply chain leadership, consulting and technology experience. This translates to the company’s “remarkable vision” for how blockchain and artificial intelligence (AI) can influence supply chains, Bien-Aimé says.

Before that vision can come to fruition, supply chain professionals need to know the blockchain basics. “Blockchain in its simplest form is a distributed ledger with high security powered by cryptography,” Bien-Aimé says. “This helps provide trust in a network with business, legal and technical capacities.” He likens blockchain to Facebook, in that they are both applications running on the internet. In addition, just as blockchain is used to facilitate secure, peer-to-peer interactions to trade cryptocurrencies, it can help create secure connections among supply chain systems and partners.

Where does blockchain fit?

Blockchain Guru is experimenting with blockchain technology and AI in a few key areas of supply chain, including forecasting, predicting estimated time of arrival, traceability, contract and quality management, contract signing, and record retention.

Bien-Aimé does not regard blockchain as a phenomenon. Rather, he says it is a tool that will be in every software engineer’s toolbox. “In five years, blockchain will be a part of every enterprise resources planning system, peer-to-peer system, transportation management system and warehouse management system,” he asserts.

As the technology evolves, it will enable capabilities that were unavailable just a few years ago. For example, it will support a new, more efficient world of collaboration between vendors and customers, with increased data sharing and fewer errors. In addition, the technology will help reduce the costs of document creation, contract management and vendor management, as well as improve traceability and delivery times.

With blockchain becoming more and more critical every day, it is important for supply chain managers — especially up-and-coming professionals — to understand the business benefits of this emerging technology. “We are entering a new era,” Bien-Aimé says. “[Think about] how we use Amazon today to buy books, clothing or accessories or how we use Google to find information or how we use wire transfers to pay bills or send funds to other people. That wasn’t the case 10 years ago. For a young professional, understanding emerging technology will be a soft skill and will add value to your pedigree.”

Eating Local, Even if You’re on the Express

Fri, 17 Jan 2020 00:00:00 -0600

While walking through a subway station, you expect to see newsstands, coffee shops, maybe a pharmacy or convenience store. Stumbling upon a farm would be, to say the least, a surprise. But that’s exactly what commuters inside Seoul’s Sangdo Station are finding. Underground along Line 7, passengers encounter a glass-walled room alive with leafy greens, herbs and edible flowers.

Kotaro Hosokawa writes for Nikkei Asian Review that the subterranean vegetable farms stem from a collaboration between Seoul Metro and agricultural startup Farm8. The goal is to boost revenue and fill vacancies in areas that are unappealing to retailers — primarily in subway stations far from the city center or outlying retail spaces.

Farm8 Assistant Manager Yeo Chan Dong emphasizes the fact that growing hydroponic vegetables under light-emitting diodes is 40 times more efficient per unit area than doing so outdoors. Plus, the hydroponic vegetables are becoming very popular among consumers — especially parents, who are wary of food grown in the open air because of South Korea’s hazardous pollution.

Notably, it’s not just farming. Adjoining these outlets are Farm8 cafes where people purchase juice and salads made from the fresh vegetables, as well as places where children can learn about agriculture. Farm8 has even started testing “smart farms,” in which artificial-intelligence-powered robots will plant, water and harvest.

Change takes root

“Without change, both organizations and individuals risk becoming irrelevant,” writes Darrin Eastes, CPIM, in the brand new issue of SCM Now magazine. He says that it’s essential for supply chain professionals to embrace transformation, challenge old norms and — as with deciding to grow salad makings in a subway station — initiate the unexpected.

In fact, this issue of SCM Now is full of stories to inspire and enable you to enact pioneering change. In the “Professional Development” department, ASCM Career Coach Rodney Apple writes: “If there is anything that is constant within the field of supply chain, it’s rapid change. Many supply chain professionals make the mistake of focusing too much time on day-to-day tasks and not enough time reading up on supply chain news or researching leading companies. Spotting and adapting to trends are powerful ways to accelerate your leadership skills.”

And “Customer Experience” department author Annette Franz offers strategies for bringing about change in your organization, including specific ways to lead by example, communicate the vision, and motivate and include others: “When people are involved in the decision-making process from the beginning, the solutions and suggestions are richer in depth and quality.”

SCM Now encompasses a world of supply chain knowledge, news, research and emerging trends. Access this key ASCM member benefit digitally; or, if you prefer reading SCM Now in print, become a print subscriber and enjoy 25% off with code SCMNOW25. Finally, our editorial team always welcomes feedback and contributions from readers. Share your thoughts and expertise at editorial@ascm.org.

Don’t Let Economic Sanctions Rattle Your Supply Chain

Tue, 14 Jan 2020 00:00:00 -0600

The U.S. Treasury Department, Office of Foreign Assets Control (OFAC), recently announced that e.l.f. Cosmetics would pay a penalty of nearly $1 million to settle potential civil liability for more than 150 U.S. sanctions violations. e.l.f.'s offense? Importing fake eyelash kits from North Korea. Fake eyelashes may not be a top national security concern, but the penalties e.l.f. is suffering are very real — even though the company believed the kits were made in China.

Last year, OFAC also reached an $8 million settlement with Zoltek Corporation, a manufacturer and retailer of carbon fiber. According to OFAC, Zoltek and its subsidiaries purchased acrylonitrile (the primary component used to make carbon fiber) from a Belarussian entity that is a specially designated national (SDN). Under OFAC rules, U.S. businesses and individuals generally cannot do business directly or indirectly with any SDN.

Given the increasingly international scope of supply chains — and the distance organizations will go to find good, affordable inputs — it is essential to understand the risks that U.S. sanctions can create. Both e.l.f. and Zoltek serve as valuable warnings of how broadly U.S. sanctions are enforced. When your company goes shopping overseas, it is critical to know your supplier and the origin of the products it sells.

Understanding U.S. sanctions

The United States was a forerunner in using economic sanctions as an alternative to military action. Even in the years preceding the Revolutionary War, the colonies sought to impose limits on purchasing and importing British goods.

In more recent times, economic sanctions have been used against a host of targets, including SDNs, governments and other entities, individuals, and even vessels. At present, the United States maintains approximately 25 different sanctions regimes. Most are administered by OFAC.

Sanctions restrict or prohibit certain conduct — and go beyond merely controlling exports and imports. In many cases, even receiving services or financial support from a sanctioned target is prohibited.

U.S. sanctions apply to U.S. citizens, lawful permanent residents or individuals protected under the Immigration and Naturalization Act; anyone in the United States, regardless of the person’s nationality; and any company or organization headquartered in the United States. In the case of Cuba and Iran, the sanctions also apply to non-U.S. subsidiaries of U.S. businesses.

Some sanctions regimes are broad, although most are selective. For example, the United States currently maintains a near absolute embargo on Iran, which means virtually all transactions are prohibited. The United States also maintains significant sanctions on Russia, but those are targeted against specific entities and individuals. As the agency with primary responsibility for administering U.S. sanctions, OFAC is authorized to deliver sanctions regulations, issue licenses (though specific licenses are not issued very commonly), provide interpretive guidance on sanctions, take enforcement action, and otherwise oversee the interpretation and application of regulations.

In addition to sanctions against countries, the United States maintains sanctions against individuals and entities engaged in specific conduct that the U.S. government considers to be a threat to national security — for example, designated narcotics traffickers; terrorists and terrorist organizations; and parties involved in weapons proliferation, human rights abuse and cybercrime. These designated entities and individuals are identified as SDNs and are listed on the List of Specially Designated Nationals and Blocked Persons.

The problem with SDNs

The SDN list is vast and includes parties that reside nearly everywhere in the world. This creates a challenge because many of them are in countries not otherwise subject to U.S. sanctions. There are SDNs in many nations with which the United States maintains good trading relations, including Canada, Mexico and the United Kingdom. Thus, managing an international supply chain means managing your suppliers, regardless of where located, against the SDN List.

Further complicating things, because of OFAC’s so-called 50% rule, the SDN list is not even a complete list of all SDNs. Under the rule, any entity that is owned 50% or more by one or more SDN is itself considered an SDN, even if not on the list.

Imagine that your organization is interested in working with the Eastern European supplier EE Co. To comply with U.S. sanctions and before engaging EE Co., you screen the company against the SDN lists. There is no match, so it appears you can do business with EE Co. But what if it turns out that 50% of EE Co. is actually owned by one or more SDNs? In addition to simply screening your potential supplier, your company should have identified EE Co.’s ownership and screened each of those parties too.

The good news is that, if you do fail to identify such a problem, the bank involved in financing the transaction will almost surely spot the existence of the SDN. Both U.S. and non-U.S. banks have been subject to huge penalties for sanctions violations over the past decade. As a result, banks are more vigilant than ever before about spotting and halting transactions with prohibited parties. There is some bad news, too: When a bank halts a transaction with an SDN, it must report the matter to OFAC. This likely will lead to OFAC asking your company for information about its business with the SDN, resulting in some major headaches.

Due diligence

It is critical to conduct meaningful due diligence into any vendor or international transaction partner. You must go beyond mere sanctions risk to consider potential risk under U.S. export law; anti-money laundering law; and, perhaps most importantly, the Foreign Corrupt Practices Act and similar anti-corruption laws.

Begin with a risk assessment to determine which transaction partners present the most sanctions risk, and determine how to allocate compliance resources accordingly. Next, a process should be developed that reflects the level of risk associated with each potential supplier. Many businesses have several tiers of due diligence. The first level might involve screening the supplier against the various prohibited parties lists, conducting a credit check, and then obtaining a written certification from the supplier that it will comply with U.S. sanctions — especially not causing your company to violate the sanctions.

Intermediate-level diligence might include the same steps as first-level diligence, as well as a review of references from the supplier or require the supplier to provide more detailed information about its operations, its history of any compliance violations and other relevant data.

The most fulsome diligence exercises might include all of the intermediate diligence steps as well as interviews with key personnel, a visit to the facility and compliance training.

Ongoing vigilance

The most effective compliance programs are rooted in a strong corporate culture. To ensure ongoing vigilance about your supplier relationships, employees need to know that your business is committed to these initiatives. Leaders must regularly convey how important compliance is to the organization. That commitment should be embodied in clear, workable policies that employees can understand and follow. An effective policy will reflect your company’s particular operations, personnel, locations and risk factors.

OFAC has published “A Framework for OFAC Compliance Commitments,” which is available on its website. The document provides a detailed summary of the five primary elements of an effective compliance program. They include

demonstration of management commitment
robust internal controls in the form of policies and procedures
routine testing and auditing of the compliance program
periodic risk assessments to evaluate new or evolving sanctions risk
compliance training.

The program also should govern personnel actions and empower them to play a leading role in day-to-day compliance. Therefore, it’s essential to have a mechanism by which employees can make good-faith reports of suspected or actual compliance violations without fear of reprisal. To that end, employees must understand how to identify potential or actual violations. Although not everyone has to be an expert on economic sanctions law and regulations, they do all need to be knowledgeable enough so that, if they encounter an unusual fact or situation, they recognize it as a potential problem and can report it.

Instruct staff members on how to look out for compliance red flags, such as if a supplier or its address is similar to that of a party found on any U.S. prohibited parties list. Other warning signs include if a supplier

is reluctant to provide information about the source of parts it uses to manufacture products
requests payment in a country outside of where it is based
primarily supplies products in a completely different business line
refuses to certify that it will comply with U.S. sanctions law.

Again, personnel do not necessarily need to know whether any of these facts, if present, mean that a violation is likely to occur. That is for your compliance team to assess. But employees should be aware enough to recognize that these situations are unusual and that transactions with an existing or potential supplier should not proceed until they have been reviewed. By implementing and abiding by a tailored, risk-based compliance program, U.S. sanctions violations can be avoided.

Perhaps most importantly, maintain records of your compliance efforts — due diligence, denied person screening, training presentations, audit reports, management communications related to compliance and so on. It is imperative to memorialize all steps taken. That way, if the worst happens, and your supplier commits a violation that could expose your company to liability, the written records become your organization’s best defense. Without them, the government will be skeptical that your business did an adequate review of the supplier before contracting with them and could claim that your company merely ducked its head in the sand about the likelihood of a violation. Unsurprisingly, the U.S. government rarely looks kindly upon an organization that willfully blinds itself to potential compliance issues.

Mattel Tones Down Supply Chain Complexity

Fri, 10 Jan 2020 00:00:00 -0600

For more than half a century, Mattel’s Hot Wheels cars have been a toy box staple. Hot Wheels were designed to look like modified hot rods or fantasy cars, often having flames painted on the sides and fantastical proportions. In addition to the toy cars themselves, the accompanying racetrack sets included connecting sections of road and ramps, as well as superchargers made from battery-powered spinning wheels to thrust the cars forward. Top speeds along these iconic bright orange ramps have been clocked at 600 scale miles per hour (just over 9 real miles per hour). This extraordinary speed was made possible by the cars’ uniquely high-quality bearings, which were actually conceived by a former Raytheon missile engineer.

Over the years, Hot Wheels have been offered in myriad shades: Spectraflame; Solid Enamel; Flying Colors, featuring flashy decals; Blister Pack; Thermal, which change color in cold water; and countless more. In fact, Mattel designers could choose from 150 different shades of red alone, with ink types ranging from glossy to waterproof.

Of course, every variation led to significant downtime at factories while equipment had to be cleaned before switching shades, as well as exponentially higher storage costs.

“Complexity is really a killer,” Mattel’s chief supply chain officer (CSCO), Roberto Isaias, says in The Wall Street Journal, explaining that his company will cut both color choices and the total number of products manufactured by about 30%. Isaias feels strongly that Mattel doesn’t need so many options and fewer shades will be hardly noticeable to consumers. “It doesn’t matter,” he told the Journal.

The toymaker also is implementing automated systems for wholesale orders and increasing minimum order quantities.

According to the article, all of these efforts are intended to simplify Mattel’s supply chain by improving, modernizing and taming “a sprawling network” that includes 13 factories, 35,000 employees during peak periods and 375,000 retail locations.

Fast-tracking careers

It’s inspiring to see more and more articles in the news these days that quote CSCOs such as Isaias. There is no doubt that organizations worldwide are recognizing the unique value of this essential role. Modern global supply chains require strategic, resourceful leaders who approach problems creatively — whether streamlining inventory complexity; eliminating shop-floor wastes, such as changeovers or turnaround time; or optimizing minimum order quantities.

ASCM was proud to hold our invitation-only, Chief Supply Chain Officer Forum again last year at our annual conference in Las Vegas. The goal of the event was to learn from one another in order to help CSCOs reduce costs and risk, drive business processes and advance supply chains. The forum followed Chatham House Rule, with no press or solicitation, to ensure that participants could share ideas and concerns openly.

In the end, the CSCOs identified three key trends: digital supply chain transformation, preparing for the next recession, and cultivating trust among customers and employees. ASCM will continue delivering valuable content on these subjects in order to help all supply chain professionals prepare for success. Look to ASCM group training, corporate seminars and the supply chain learning center, as well as our research reports and journals, blog and SCM Now magazine. These essential supply chain insights are sure to accelerate your networks and supercharge your career trajectory.

APICS Education Yields People and Process Benefits

Mon, 06 Jan 2020 00:00:00 -0600

After five years of 25 percent annual growth, Load King Manufacturing Company was feeling some growing pains. Leaders at the Jacksonville, Fla.-based full-service turnkey package provider were concerned about work quality and order commitments being compromised. They also knew that they needed to fully train and engage the more than 125 new employees.

To serve its variety of clients in the food and beverage retail space, Load King uses multiple trades, including wood, metal, solid surface, electrical and graphics production; hardwood finishing; panel lay-up; equipment consolidation; design; permitting; and construction, which creates a complicated operating environment to understand, much less lead. To get the company back on track and bring everyone up to speed, Load King executives made the decision to focus on people and processes.

Initially, a few programs were implemented to improve output and maintain the company’s high quality standards, but some team members struggled to understand program applications and processes, explains Chad Grimm, chief operations officer. Company leaders turned to APICS education to help all Load King departments understand industry terminology and speak a common language, which would, in turn, increase employees’ overall operational knowledge.

EQUALIZED LEARNING OPPORTUNITIES

Load King worked with an APICS instructor to train and educate staff members on the APICS body of knowledge. The business was committed to training all of the company’s leadership, from the shop floor team lead all the way up to the president of the company. “We had the directors and executive directors learning and intermingling with the team leads and shop floor managers,” Grimm recounts. “We were all in this together, and everybody was starting at the same level, regardless of prior experience or knowledge.”

About 50 employees participated in the initial round of APICS education. Two groups were trained on different days. This created more manageable class sizes and enabled personalized interaction between the instructor and participants. Also, to maintain company productivity, each group only participated in training once a week. Trainings were hosted on-site during the work day for added convenience. Once the class was completed, employees were given time to study for and take APICS exams.

From the first batch of students, 14 passed the Basics of Supply Chain Management (BSCM) exam, the first test toward earning the APICS Certified in Production and Inventory Management (CPIM) designation. Company leaders immediately noticed a significant improvement in interdepartmental communication and collaboration. “During meetings, various team members would reference APICS content when making a point,” Grimm explains. “When solutions to challenges were difficult to come by, pulling out APICS training material for guidance became the norm.”

Employees witnessed benefits as well. “From my perspective as a project manager, it has really helped with communication between different departments at Load King,” says Ricky Regnier, project manager II. “Whether I am discussing design and build methods with engineering or scheduling end due dates with manufacturing, being able to speak the same language and understand the unique challenges throughout the organization not only makes my job easier but also has helped me pass along the necessary information to other departments to help make their jobs easier.”

Hans Vienrich, CPIM, manufacturing engineer II, notes that his APICS education and certification have enhanced his appreciation of the importance of his role. “Understanding the interaction of [enterprise resources planning] (ERP) and [material requirements planning] (MRP) has helped me apply manufacturing strategies and decisions to operations and processes,” he says. Vienrich adds that earning APICS certification has instilled in him a sense of confidence in what he does at Load King.

After this success, the business launched a second round of training for the new CPIM Part 1 course to educate the rest of the company’s leadership. This time, 53 associates representing a cross-section of all departments, educational backgrounds and ages joined the training. Nine of the participants were individuals who passed the BSCM exam but wanted a refresher. All other participants were required to test for certification, but they were not penalized if they did not pass.

PROCESS BENEFITS

The timing of the first APICS training coincided with thee major projects at Load King. The company was in the process of implementing a new ERP system; engineering modeling software; and more than $6 million in CNC manufacturing equipment, which required new build and assembly methods. “Learning how to integrate planning, scheduling, inventory, production, shipping and more into a unified system required a deep understanding of how all the parts integrate to create the whole manufacturing and shipping process,” Grimm explains. “APICS helped with educating our team on how to bring order and properly defined organization to frequently conflicting functions and departments.”

Specifically for the ERP system implementation, APICS helped the team more accurately define the parent-component relationship with setting up bills of material (BOMs). “When setting up BOM structures, what appears to be fairly straightforward can have a significant positive or negative effect on the resulting outcome for different aspects of the company,” Grimm says.

He adds that APICS also helped assuage any change-management worries by enabling opposing sides of the discussion to understand the full relationships associated with setting up BOMs, clarifying multi-level versus single-level BOMs and purchased parts, and what the collection of accurate data could mean for analyzing performance.

Ultimately, using the APICS knowledge participants gained from training, Load King leaders were able to effectively apply sales and operations planning, master scheduling, master production and material requirements planning to more accurately differentiate the corporate and operational time frames and properly format information within the new ERP system. In the end, accurate time frames were established and job descriptions were rewritten.

STRUCTURED, SUSTAINABLE GROWTH

During APICS training and the rollout of those three major projects, Load King leaders intentionally held off new business development so that they could remain internally focused on people and processes. This, they believe, helped poise the company for its next growth strategy to diversify its customer base and double its gross revenue. “Currently, our company employs approximately 200 employees. To double the size in gross revenues requires scaling up the way our management team operates,” Grimm explains. “APICS training has opened the door for coaching our team leads, shop floor managers and even directors to grow uniformly with the company.”

Now that the company is back in growth mode, the knowledge and capabilities gained through APICS training and the technology upgrades have enabled Load King to expand its services to new markets, including hospitality, entertainment and branded retail. As the company’s business continues to increase in complexity, Load Star leaders know that it will be critical for all team members to have a strong understanding of all relevant supply chain practices. This will enable the company to continue on its trajectory of success and move more quickly than its competitors. As Grimm says, “We are relying on APICS education to continue helping us achieve this.”

Visionary Manufacturing

Fri, 03 Jan 2020 00:00:00 -0600

Last month, Tesla unveiled its Cybertruck, and the internet was instantly flooded with reactions from fans and critics alike. Some appreciated the electric pickup’s futuristic design, while others called it absurd, brutalist and a stainless steel triangle. The majority of the comments were about CEO Elon Musk’s botched stunt at the presentation: A metal ball was hurled at the Cybertruck’s so-called unbreakable windows, which shattered immediately — both times.

Nevertheless, Musk is widely regarded as a genius, a disruptor and a visionary; likewise, Tesla is undeniably a success story. So, it’s probably wise to listen when Musk asserts that the next big shift in manufacturing will be robotic blacksmithing — a method that blends the traditional blacksmith’s art with modern digital capabilities. In other words: machines build machines.

Glenn S. Daehn, professor of materials science and engineering at The Ohio State University (OSU) explains: “Parts are shaped by repeatedly and incrementally forming a piece of metal, which is precisely positioned into a press. This powered press or hammer system will interchange tools depending on the shape needed. By automating the process of shaping a part, but using the basic approach of a blacksmith, a machine can treat larger parts and be more efficient and reproducible than a human ever could.”

Implements forged by blacksmiths are known to be exceedingly sturdy because of the working and shaping of the metal. During the process, it develops directional strength, much like the grain in a piece of wood. Of course, no human could forge parts the size of, say, aircraft landing gear, submarines or locomotives. But robots could. This was demonstrated in 2017 by a team from OSU. They added hardware and software to a conventional computer-numeric-control milling machine to adapt it for controlled deformation. Daehn believes this can revolutionize the production of structural parts, resulting in a new class of customized and optimized products.

Tesla’s unconventional Cybertruck design — involving the folding and bending of metal sheets — shows what’s possible with robotic blacksmithing. In addition, the methodology may mean less-expensive, more scalable processes that could help Musk’s Space X launch missions on budget and with speeds “unthinkable using NASA’s old-school manufacturing methods.”

Digital and dynamic

As we embark on a new decade, supply chain professionals cannot overlook the value of digital supply chain transformation. With this in mind, ASCM has partnered with Deloitte Consulting LLP to release the Digital Capabilities Model (DCM) for Supply Networks. This model helps industry professionals envision and build the digitally enabled capabilities required to transform their linear supply chains into a set of dynamic networks. It is closely tied to the Supply Chain Operations Reference Digital Standard in order to help organizations immediately apply the model without restructuring their processes, metrics or practices.

Watch this webinar to learn more about the DCM and take the first step toward cultivating your organization’s digital readiness in 2020 and beyond.

Welcoming Innovation and Growth in 2020

Fri, 27 Dec 2019 00:00:00 -0600

In 1974, IBM engineer George Laurer combined 12 digits and 30 parallel bars of varying widths and spaces to invent the universal product code (UPC). A few months later, the first UPC was scanned in an Ohio grocery store on a 10-pack of Wrigley’s Juicy Fruit gum. (That scanner is now in the Smithsonian.)

Between 1976 and 1980, the number of stores using UPCs climbed from about 100 to more than 2,000. In the 1980s, retailers began to really embrace the potential of UPCs. Most notably, Walmart realized massive supply chain efficiencies by using the codes to automatically order products through its point-of-sale system.

Currently, the codes are scanned more than 6 billion times every day and are among the most trusted symbols in the world. During the past 40 years, very few other technologies have remained as relevant and increased in versatility as much as the UPC.

“They don’t get much attention, but bar codes are one of the most important inventions ever,” Marko Vrbnjak writes for the NiceLabel blog. “They have an incredibly important role in improving the way businesses capture and share information, as well as optimizing the movement of items along the supply chain.”

UPC technology plays a critical role in the smooth functioning of our global economy, helping businesses track inventory around the world. UPCs let retailers know when a product is about to become out-of-stock. They enable brands to communicate effectively with consumers by placing codes in advertisements to be scanned by smartphones. They safeguard patients by ensuring hospitals give medications to the right people and in the correct dosages.

And they do all of that with a 99.99% success rate.

See the coming trends

UPC architect Laurer passed away this month at 94, but he did see the UPC become a standard global identifier and packaging mainstay during his lifetime. Just last year, Laurer himself said he was still “amazed” and “in awe of” the invention, demonstrating how challenging it can be to appreciate the full impact of innovations and developments as they happen.

To help you stay on top of what’s transforming supply chain, ASCM’s Research, Innovation and Strategy (RISC) Sensing Subcommittee has identified the top 10 industry trends to watch in the coming year. They include the following:

Advanced analytics and automation will support the shift to data-centric, automated decision-making. To prepare, companies must reskill their workforces and revamp data infrastructures.
Ongoing supply chain risks will fuel the creation of tools and processes to help companies anticipate danger and develop mitigation strategies.
Effective cybersecurity will be a prerequisite, as the explosion of data and data-driven organizations brings about new, interwoven areas of vulnerability.
Consumer expectations, mainly involving e-commerce and shipping speeds, will continue to escalate.
In the extremely tight labor market, finding, developing and retaining workers will remain a big challenge.
Digital supply chain will infuse 2020, and industry professionals must ensure they have the right capabilities and plans in place.
3D Printing will be tapped for high-volume manufacturing, disrupting a growing list of industries.
Consumers will demand that supply chains operate with a keen focus on the triple-bottom-line of people, planet and profit.
The internet of things will move from the fringe to the mainstream, thanks to the increasing prevalence of inexpensive and reliable sensors.
As new urban landscapes are created, the world will face never-before-seen supply chain challenges.

Learn more about how ASCM research is working to provide you with detailed insights into a variety of key topics, as well as practical advice to help you and your organization gain a true competitive advantage throughout the New Year.

The Magic of Mentorship

Mon, 23 Dec 2019 00:00:00 -0600

Editor’s note: Priyanka Pande, CPIM, is a sourcing analyst at Santander US. She earned her Master of Science in engineering management and a graduate certificate in supply chain from Northeastern University in 2017. A few years ago, Pande sought a mentor who could help her navigate her job search, supply chain career goals and more. She reached out to Gary Smith, CPIM-F, CSCP-F, CLTD-F, chief of enterprise asset management at MTA New York City Transit. SCM Now Editor-in-Chief Elizabeth Rennie recently had the opportunity to speak with them about their experiences, their mentor-mentee process and lessons learned from this relationship.

Rennie: Before you began working together, what did you expect from your mentor or mentee? And what were your key objectives?

Pande: As an international student just out of grad school and about to the enter the workforce, I needed a direction and advice from someone who is an expert in the field. There are numerous choices one has to make: choosing the right company and industry, narrowing down wide-reaching career options, selecting a job offer. It can be overwhelming. Thus, having mentors who can guide and provide critical feedback is of the utmost importance. My goals were to develop a trustworthy and a non-judgmental relationship where I could freely express myself and ask for advice — and to find a mentor who would provide different perspectives, offer a direction to my career and give critical feedback in order for me to grow.

Smith: When I first started mentoring, I wasn’t sure what to expect. My first priority was to give back something to a profession that has been so good to me for nearly 40 years. Most of the good things that happened in my career were directly or indirectly from the advice of a mentor of my own. My key objectives were to be available for my mentees, listen to them and do my level best to support them in their careers.

Rennie: Please tell me about the process of finding the right mentor or mentee for you.

Pande: I have always been interested in knowing people associated with ASCM and currently working in supply chain. I started to use LinkedIn as a tool to look for experts and professionals in the field. And with Gary’s impressive profile and him being extremely kind and responsive, my choice was clear.

Smith: Many of my mentees come from the ASCM Mentor Center. As Priyanka said, she found my profile on LinkedIn and contacted me directly, so I asked her to register through the Mentor Center. Next, I asked her to provide me with a copy of her resume. Resumes are very important, as they tell a prospective employer your story. I recommend that all of my mentees focus on what they have accomplished, instead of their responsibilities. I ask them to include any instances where they reduced cost, increased throughput or improved accuracy. I also look for any grammatical errors. Poor grammar in a resume makes it difficult to read. For many of my mentees, English is a second language, and English grammar is notoriously difficult.

Then, we discuss interview strategies and tactics. I stress being prepared. Research everything available on the company and people you will be talking to, and thoroughly review the job description to understand what is stated and what is implied. I then ask them to prepare notes on how their studies, projects, internships and previous job experience make them the right candidate for the position. I encourage them to tell stories about their experiences so that, at the end of the interview, the interviewer really has an idea of who the mentee is. These young people have accomplished so much!

Pande: I remember when I first had a virtual meeting with Gary, I also made sure to share my background and current interests. For the first couple of meetings, we got acquainted with each other and understood what were the important objectives that we needed to focus on. As I was looking to enter the real world after my graduation, I prepared a list of questions for Gary. For instance, some of the questions that I asked were: What are the skills I want to develop and experiences I want to gain in the next five years? Is it worth relocating for a new job? How can I develop leadership skills? Can you help me evaluate job offers? Gary provided me with really great insights on how to approach a job search and narrow down my options. I am so glad I was able to get four job offers from great companies!

Rennie: What is your mentoring time commitment, and how often do you communicate?

Pande: Mentoring is a two-way street, and effort from both sides is necessary to drive the relationship forward. Though we do not have a fixed time commitment, we make sure to touch base over a call a couple of times a month, in addition to numerous regular email communications. If there is any important career-related activity happening, we certainly make extra time to discuss things. At the end of a day, it is a relationship, and we let it grow organically on mutual respect and trust.

Smith: All of my mentoring relationships are reasonably mature now. Some of the mentees are still in school, some are in graduate school, and the rest are working. A couple have even received promotions. I check in often, and it is really great to see their futures unfolding!

Rennie: What kinds of topics do you discuss?

Pande: We exchange our thoughts on current industry trends, share interesting articles, or talk about podcasts we like. Sometimes, it’s just about business books we like to read. One of the best pieces of advice I ever received from Gary was when I was preparing for an interview. He said: “Priyanka, you have written many articles and cases. I would bring them with me. That could help you score an extra point.” That one piece of advice he gave me was a true game changer in my job interviews. I thanked Gary from the bottom of my heart.

Rennie: Many people involved in supply chain mentorship programs note that mentoring is a great way to create more diverse businesses, gain new ways of thinking, and help people work effectively across cultures and generations. Have you experienced anything that would support these views?

Pande: For many years, supply chain has been considered an uncommon career. Most of the current supply chain workforce is almost reaching the retirement age or beyond. Also, there have been difficulties in attracting fresh talent and retaining them. For example, when I was working at Staples Inc. in the logistics team, the people I was working with were 20-to-30 years more experienced than I was. It was a surreal experience working with a different generation and learning from them. I feel mentoring is a great way to bridge that gap. It builds confidence for the mentee to say “yes” and explore opportunities to develop a career roadmap.

Mentoring carves the path for personal and professional success. I have received great insights on how to approach a job hunt, as well as guidance and feedback in terms of mock interviews, applications, certifications, and instilling confidence and making me believe in myself. Also, being able to get opportunities through my mentor’s network, connecting with like-minded people and expanding my professional network are invaluable.

Smith: My mentees are excited and inspired. I am in awe of these young men and women — many of whom have traveled halfway around the world for an education and new life. The majority speak more than one language; some three or four. These people are multicultural, multi-lingual and multitalented. They are the future of our industry and our profession, and when I work with them, I know supply chain’s future is secure. They inspire me, and I am so impressed by their courage, intelligence and determination. They are my heroes.

5 Supply Chain Cures for Winter Break Cabin Fever

Fri, 20 Dec 2019 00:00:00 -0600

No matter how your family celebrates at this time of year, one thing is certain: School’s out, and the kids need to be entertained — often for as long as three full weeks. “It’s Beginning to Look a Lot Like Christmas” comes on the radio, and I bet every caregiver knows exactly what Perry Como or Bing Crosby are talking about when they sing, “Mom and Dad can hardly wait for school to start again.”

Don’t get me wrong. My kids are fantastic, and I’m enjoying every minute with them this December. But let’s be honest: The winter break does tend to drag on.

So, to keep the little ones busy, my team at ASCM has put together the following list of five interesting and fun activities. Yes, of course they are supply chain-related! But we feel confident that you will secure the title of “cool parent” (or cousin, aunt/uncle, grandparent, family friend) when you share these with the young people in your life. Maybe you’ll even help fill the supply chain talent gap.

Engage junior scientists and engineers with the Lemonade Activity. Work with your kindergarten-to-2nd grader to conduct experiments and use math to measure and make lemonade, all while learning about supply chain. (There are also higher-level activities for older elementary students.) Key STEM concepts include geography, climate and the water cycle; forming and testing hypotheses; and measuring solids and liquids.
Lead your 6th, 7th or 8th-grader through an interactive endeavor of prototyping and mass production with the Paper Airplane Game. Design, engineer and test paper airplanes; select the best prototype; and assess manufacturing capability as that design goes down the assembly line. Kids will see firsthand why math is essential to manufacturing performance.
The LEGO Booth Activity, for students in 6th through 12th grades, highlights innovation and smart design. Kids create their own LEGO car, run a test drive and assess performance. Engineering and supply chain concepts include technology innovation, prototype creation, design and test engineering, and quality control.
Introduce your high school student to SCM Now magazine. You will inspire tomorrow’s leaders with my interviews with female chief supply chain officers from organizations such as Johnson & Johnson, Kimberley-Clark and The Hershey Company. In the same issue, have them check out the feature on Carey Lohrenz, the first female F-14 Tomcat Fighter Pilot. And don’t miss “The Magic of Mentorship,” which demonstrates why young people simply can’t overlook the value of connecting with professionals of different ages, experiences and backgrounds.
For college students, suggest they spend a few minutes learning about the ASCM Scholars Education Program. ASCM is dedicated to developing the supply chain leaders of tomorrow, and we are doing so by giving graduate and undergraduate members free registration to ASCM 2020. This offers the amazing opportunity to attend educational sessions, network with professionals in the field, learn from a dedicated mentor and much more.

On behalf of all of us at ASCM, we wish you and your family an enlightening holiday season. Make the most of your time together — school will be back in session before you know it.

E-Commerce Holiday Delivery Speeds Soar

Fri, 20 Dec 2019 00:00:00 -0600

With December 25^th just a few days away, there’s no doubt that the elves are putting in some overtime at Santa’s workshop. According to tradition here in America, enough toys for all the children in the world are currently being manufactured on a sprawling campus way up in the North Pole. It’s a family business, with the complex also housing Santa, Mrs. Claus and at least eight reindeer.

However, as people from England or Finland will tell you, the real Father Christmas actually resides in Lapland. Part of the arctic circle, Lapland has more reindeer than people, which is great news for anyone concerned about the driver shortage.

Japanese kids are being extra good right now in anticipation of a visit from Hoteiosho — a god with eyes in the back of his head. As with most Buddhist gods, he lives on top of Mount Fuji, but treks down each year with a sack of toys for children — at least those he doesn’t spy misbehaving.

In Iceland, the 13 Yule Lads are descending from their mountain home, each one placing a gift in children’s shoes at night. However, the small tokens may not be worth the mischief these guys cause. With names including Spoon Licker, Door Slammer and Sausage Swiper, these pranksters are clearly up to no good.

Interestingly, these customs all have something in common: Holiday inventories are traditionally stored in the middle of nowhere, miles and miles from the end customer. Of course, the current e-commerce boom is changing everything.

“Before the days of online shopping, supply chains consisted mostly of warehouses and distribution centers far away from cities for manufactured goods awaiting transportation to malls and other brick-and-mortar retail locations,” writes Peter Grant for The Wall Street Journal.

Now, as retail success is increasingly tied to delivery speed, Grant says the “battle of landlords” is creeping ever closer to city centers. The world’s biggest real estate owners are racing to buy up more urban land, establish well-placed warehouses and dominate the business of lightning-fast e-commerce.

This trend also has the potential to enhance reverse-logistics efficiency. In fact, e-commerce returns constitute 700-million-square-feet of warehouse space in the United States alone, making reverse logistics facilities the number-one new type of warehouse. This isn’t surprising, when you consider that we will return about $100 billion worth of gifts over the next few weeks, and it all has to go somewhere.

Until retailers figure out how to guarantee that consumers hold on to their purchases — and Santa and his cohorts perfect their gift lists — the warehouse wars will escalate. But we can all help alleviate some of the tension by remembering that it’s not about what’s under the tree (or in the shoe) that counts. With that in mind, all of us at ASCM wish you a wonderful holiday season. Hopefully, you are enjoying some well-deserved time away from the workshop.

Upholding Human Rights in Gold Supply Chains

Fri, 13 Dec 2019 00:00:00 -0600

This past Tuesday, we celebrated Human Rights Day, in honor of the United Nations (UN) General Assembly's adoption of the Universal Declaration of Human Rights (UDHR). Drafted by representatives from across the globe, this milestone document was proclaimed December 10, 1948, for the first time declaring fundamental human rights to be universally protected.

As all supply chain professionals know, each of us has a responsibility to uphold the UDHR and relentlessly protect human rights in every corner of the world. Recently, I was encouraged to read that noteworthy strides are being made in the El Chocó gold supply chain.

Mining.com reports that about 500 local gold panners, or “barequeros,” are now part of a “fully traceable global supply chain” in this Colombian region of enduring conflict. Artisanal gold mining is one of the main sources of income for people in El Chocó. Almost half are women, and children as young as seven years old have been found scavenging.

“A group of international organizations, led by Switzerland’s Better Gold Initiative (BGI), has extended their responsible mining initiative to hundreds of artisanal gold miners,” Cecelia Jamasmie reports. “The program seeks to improve gold panners’ working practices and prevent child labor in one of Colombia’s poorest regions.”

BGI’s system demands strict due diligence by the artisanal miners before they are permitted to sell their gold, ensuring the barequeros receive a competitive price. It also lets them know the exact destination of their gold.

Raise the bar

The importance of ensuring socially responsible supply chains continues to deepen. We must commit to making an impact and fulfill our responsibility to create a better world through supply chain. Preserving human rights throughout our global networks demands an unwavering focus on corporate social responsibility, and ASCM is committed to supporting our members as they work toward this goal.

Through the ASCM Foundation, we are drawing on the power of supply chain to achieve vital goals, including

building frontier and humanitarian supply chains in sub-Saharan Africa to give people consistent and affordable access to food, medicine, vaccines and other life essentials
providing K-12 supply chain, STEM and career awareness opportunities that educate and engage future supply chain professionals and address the skills shortage
developing diversity and inclusion initiatives that ensure people of all profiles and backgrounds can do meaningful work, share perspectives and succeed in supply chain careers
amplifying supply chain workforce development, including career training and supply chain certification resources in order to put people on a meaningful path to high-quality, rewarding jobs.

We are also helping supply chains everywhere achieve critical ethical standards, demonstrate transparency and blaze a trail to responsible business. ASCM Enterprise Certification is the first comprehensive evaluation of the ethical, economic and ecological dimensions of a supply chain. Criteria focus on anti-corruption, human rights, risk management, climate strategy, product life cycle stewardship and more.

I hope you will take a moment to learn more about our Foundation’s initiatives and how your organization can lead the way toward supply chain excellence by earning the Enterprise Certification. We all have a role to play in safeguarding fundamental, universal human rights.

Attract Applicants with Standout Job Descriptions

Thu, 12 Dec 2019 00:00:00 -0600

The competition for top supply chain talent is fierce. Many organizations struggle to fill job vacancies in a timely manner. One of the most common mistakes companies make is failing to craft job descriptions that appeal and motivate people to act. Spend a few minutes on any job board and you will see numerous awful job descriptions. Many contain nothing but a generic list of tasks, responsibilities and desired skills. Job descriptions like this reek of indifference, convey that the employer is not interested in engaging its employees, and ultimately do much more harm than good.

There is a clear and strong association between a company’s job descriptions and its brand image. Just as negative brand image deters consumers from purchasing products or services, apathetic and uninspiring job postings deter the best candidates from applying.

Supply chain professionals must optimize their career marketing efforts. Taking the time to craft job descriptions that compel the right candidates to apply is a great place to start.

Begin with targeted job titles. Instead of using generic or vague terminology, integrate functional or departmental context into the job title. For example, if you have a logistics analyst opening on your distribution engineering team, instead of saying simply, “Logistics Analyst,” add context with, “Logistics Analyst - Distribution Engineering.

Then, write copy that’s exciting and intriguing. Your target audience should want to keep reading further. An effective position overview provides a brief, compelling description of the most important aspects of the job and should include the following elements:

The power statement describes the core objectives of the role. For example: “This position leads strategic planning, operational execution and continuous improvement initiatives in order to enable growth, improve customer service levels and reduce costs.”
A functional summary should provide a high-level overview of the department, how the role fits in with the organization, who the position reports to and the reporting relationship, key internal and external groups the role interfaces with, major projects the role will support, and any people leadership or budgetary responsibilities.
Key selling points explain why the applicant should want to apply and what is in it for them by joining the business. Note how this role will challenge and benefit the individual.

In the company overview, consider going beyond what can easily be found on your website. Include information about your products and services, industry expertise, annual revenue, number of employees, headquarters location, and geographical footprint. This is also an excellent place to add details about company culture, explain why your organization is a great place to work, and share employee benefits.

For the role and its responsibilities, focus on describing the top performance objectives. Generally, this would include the work and objectives that need to be completed in the first year on the job to be considered successful. Using bullet points, provide 5-10 performance objectives in order of most important to least important. From there, if you still need to add some information on roles and responsibilities, list them succinctly below the performance objectives.

This approach is valuable for hiring managers because it forces them to rank the most critical aspects of the job, which ultimately answers the question: What does success looks like in this role? It is helpful for job seekers because it provides a great understanding of challenges, expectations and how someone can thrive in the position. For recruiters, it demonstrates the most important criteria needed to effectively screen and qualify applicants, ensuring that candidates have the right experience and accomplishments in their work history.

The job requirements section then describes the minimum and preferred qualifications. Often, organizations miss the mark here by listing far too many qualifications. This quite understandably deters candidates from applying. In light of the ongoing supply chain skills shortage, err on the side of flexibility over rigor.

Next, identify the job classification, location, and any travel requirements or relocation assistance. State whether the position is exempt or non-exempt, full-time or part-time, an internship, and so forth. If travel is included, provide the estimated percentage along with frequent locations visited.

And last but definitely not least, tell candidates how to apply.

Circular Supply Chains Will Shift SCOR Supply Chain Skills

Tue, 10 Dec 2019 00:00:00 -0600

Note: This blog post is part of a five-part series called “Toward a Circular Supply Chain: Shifts in SCOR Supply Chain Habits.” Keep an eye out for future posts.

Imagine: All waste and process by-products in the world will become the raw materials and inputs needed by all the processes in the world. In turn, the maintenance, refurbishment and remanufacturing industries will dramatically increase in size and value. Then, aftermarket supply chains will become the dominant model as linear supply chains give way to circular supply chains.

In the circular economy, materials and resources loop throughout processes indefinitely. Supply and demand loops among value networks allow for types of monetization that were previously impossible. On a global scale, this circular economy is expected to add $4.5 trillion to the global economy by 2030.

Supply chains around the world will be challenged to shift their habits to support new business models. The increased complexity that will be managed by global supply chains will be represented by future Supply Chain Operations Reference (SCOR) model versions.

Skills in a circular economy

Workforce skills, experiences and training become critical for the transition to a circular economy. Supply chain roles make up 40% of the jobs in the United States, and these roles will shift over time, prompting an update of skills, experiences and training.

Emerging circular jobs highlight the importance of both maintenance and refurbishment as well as digital technologies.

Skill shifts in a circular supply chain

Several skill areas will shift and expand in the SCOR model. Asset management will become a broader topic. For example, as items remain in use longer, more types of items will be considered assets.

Inventory management — already a vast skills topic — will become even larger. The definitions and types of inventory will expand as materials circulate and are managed as both raw materials and assets.

Skills regarding performance become even more critical to link performance to the overall supply chain strategy and develop meaningful key performance indicators that properly balance cost, quality, time and the circularity of a supply chain or network.

New skills also will be added to the SCOR model. These may include skills such as

digital literacy and industry 4.0 awareness
digital value stream mapping and the idea of digital lean management
circular economy awareness.

Shifts to the SCOR Model

The SCOR model has reflected supply chain processes, performance metrics, practices and skills for more than 20 years. It will continue to shift to reflect the supply chain habits required to support industry 4.0 and a circular economy, and supply chains will continue to strategically position organizations to succeed.

Join the circular supply chain community

Find out about the latest news and events about circular supply chains around the world by following this LinkedIn page.
Join a dedicated space to discuss how supply chain can accelerate the transition to a circular economy in this LinkedIn group.

Meet the New Seasonal Worker

Fri, 06 Dec 2019 00:00:00 -0600

Robots are amazing things. They conquer chess legends and Jeopardy champs. They conduct world-renowned symphony orchestras. One day, they may even help humans establish habitats on other planets.

Most job-seekers also know that robots are now helping recruiters and hiring managers review resumes, using algorithms to identify the most promising candidates. But is it time for robots to start polishing up their own resumes? If they do, the industrious ones might just make a few extra bucks this season.

“The holiday hiring frenzy is under way and robots are joining the rush to seasonal jobs,” writes Jennifer Smith for The Wall Street Journal. She explains that “surge robots” are being used to bolster the armies of seasonal warehouse workers and help retail and logistics companies handle the tight labor market.

Online order volumes are multiplying as holiday shoppers fill their digital carts. To cope, some businesses are employing extra fleets of collaborative robots, or “cobots,” which use cameras, lasers and sensors to navigate warehouse aisles and lead humans to the right shelves. Many of these cobots are available for lease, making them the ultimate seasonal hire.

The talent shortage and consumer demand for ever-faster delivery are escalating the need for warehouse automation. According to market advisory firm ABI Research, by 2025, 27.6% of warehouses globally will deploy commercial robots, compared to 3% in 2018.

“The companies are looking for help in the labor-intensive business of storing, sorting and packing goods for shipment, especially around the holidays, when retailers and logistics providers add tens of thousands of extra workers,” Smith explains.

While cobots are helping to make things easier on some warehouse employees, there is concern over how they track worker productivity and the potential of related overexertion and injuries. Also, automated employee benchmarking may lead to added stress “when everyone’s worried robots will take their jobs.”

Many businesses argue that automation will free up workers to do higher-value, better-paid tasks. According to McKinsey & Company: “As the nature of work changes with automation, millions of people may need to switch occupations and acquire new skills. Automation will displace many jobs over the next 10-to-15 years, but many others will be created and even more will change. Jobs of the future will use different skills and may have higher educational requirements.”

Prepare your team

As rapid advances in automation continue permeating supply chains, it’s essential to have the right people on your team to program, repair and work with these tools. In fact, McKinsey predicts that, by 2030, there will be a 90% surge in demand for workers with advanced information technology (IT) and programming skills.

Equip your employees with the knowledge and expertise they need to advance your supply chain organization. The APICS Certified in Logistics, Transportation and Distribution (CLTD) program will help them gain in-depth knowledge of a broad range of warehousing topics. The certification explores technologies that provide distribution control and more effective decision-making; management strategy for efficient warehousing processes; and smart warehouse layouts that support operations and technology. CLTD education also features automation and IT applications that can support effective warehousing operations and reduce labor costs while improving quality.

Beginning a CLTD journey today will position you for success in the supply chains of tomorrow.

Circular Supply Chains Will Shift SCOR Supply Chain Practices

Wed, 04 Dec 2019 00:00:00 -0600

Note: This blog post is part of a five-part series called “Toward a Circular Supply Chain: Shifts in SCOR Supply Chain Habits.” Keep an eye out for future posts.

Imagine: All waste and process by-products in the world will become the raw materials and inputs needed by all the processes in the world. In turn, the maintenance, refurbishment and remanufacturing industries will dramatically increase in size and value. Then, aftermarket supply chains will become the dominant model as linear supply chains give way to circular supply chains.

The practices in the SCOR model address the way supply chain professionals solve problems as they manage and operate supply chains. These include emerging, best and standard practices. The classification categories of these practices are outlined in the included chart. These practices and their applications will shift as circular business practices require circular habits from supply chains around the world.

When viewed as part of circular business models, shifts to current supply chain practices will be extensive. Imagine the impacts to the practices supply chain managers use today when circularity factors are considered. For example, Integrated Business Planning, Scenario Planning, Supply Chain Optimization and Strategic Sourcing will all expand to include elements of the circular economy and circular business models.

New habits will soon be defined as emerging practices. These could include practices such as

product as a service
materials provenance, or the practice of tracking a single part or material through its life cycles
industry 4.0, or the practices related to the technologies that are developing and becoming more widespread.

Shifts to the SCOR Model

Join the circular supply chain community

Find out about the latest news and events about circular supply chains around the world by following this LinkedIn page.
Join a dedicated space to discuss how supply chain can accelerate the transition to a circular economy in this LinkedIn group.

Top Supply Chains Favor Leadership Over Process

Tue, 03 Dec 2019 00:00:00 -0600

Supply chains are internal superhighways, deeply integrated in all organizational functions. They have the unique capability to span facilities, divisions, departments and teams while generating accretive value for the business. Therefore, as companies search for new ways to create competitive advantage, the effective management of global supply chains is uniquely critical — particularly with regards to leadership and cultural components. With this in mind, the authors of this article wanted to explore a few key questions:

When organizations have similar markets and resources, why do some thrive while others struggle?
Can an engineered supply chain process be so good that, regardless of its leadership, the supply chain always delivers?
Are leaders able to make a real difference in performance by creating a superior supply chain culture?

To answer these questions, we conducted interviews with 23 supply chain executives from small, midsize and large companies. We specifically selected businesses with winning global supply chains. Their success was measured based on five generally accepted dimensions: gross profit percentage, the earnings per share price of company stock, change in revenue, inventory turns and net income. The supply chains were also evaluated according to the degree they practiced workflow integration, incorporated standardization, used lean tools and approached operations systematically.

While this was not exactly a scientific study performed by a research firm, our conversations with these supply chain front-runners made it crystal clear that best-in-class supply chains put leadership above process. We discovered numerous themes in support of this finding:

Global supply chains create value within their organizations, and great leadership is a foundational strategy for doing so. This is accomplished by adding highly skilled professionals to the supply chain team, integrating all functional aspects of the supply chain, and leveraging their scale in practically every area — commodity spending, global sourcing, talent management, sales and operations planning (S&OP), and so on.
In top-performing networks, supply chain processes are not as standardized across the business as one might think. Instead, leadership autonomy and different approaches and perspectives from site to site are encouraged, especially if performance is superior.
Having a people-oriented culture is critical. One vice president of global supply chain who we interviewed shared an example of a complete cultural transformation: His department had been primarily focused on transactional work. Employees viewed their role as completing a specific number of digitized products within a specific time horizon, nothing more. But when this vice president was able to show them how their work linked to company objectives and overall strategy — and indeed influenced stock price — this all changed. Not only was morale significantly improved, but after the leadership intervention, the previous 18-to-20-day time horizon for the design of product to digitization was reduced to only 24 hours.
Leaders of superior supply chains know they can make a positive difference while performing their roles. They thoughtfully consider how they spend their time and are enthusiastic about the efficacy of the soft side of leadership compared to the hard science of process.

Based on what we learned, following are five ways to emulate this highly effective supply chain leadership.

First, senior supply chain management must champion supply chain strategy. By clearly and effectively doing so, these executives demonstrate to the entire leadership team a strong connection to organizational alignment. In addition, a thoroughly developed and well-executed supply chain strategy creates even greater value for the business. Success within the global supply chain, as in so many other areas, starts at the top, and having a seat at the table is a critical.

Second, the supply chain function must be viewed as a key income generator. As we continue to shift toward a digital economy, a company’s supply chain becomes increasingly more important and strategic. Modern supply chains have finally grown up, and their value now transcends the movement of goods from location to location. When supply chains are viewed as a core capability, they are not only expected to protect against cost avoidance, but also to generate accretive income for the business.

In addition, both customer- and performance-oriented culture must be considered critical to supply chain strategy. The leaders we talked to leverage the qualitative attribute of culture as a business enabler — in other words, they use culture to drive results. Organizational management is much bigger than simply managing numbers and customers; it also means managing the environment in which people exist and supporting employee relationships.

Excellent supply chains also operate within a high-performance culture where everyone contributes. The competitive landscape is increasingly more global where challenging. To remain relevant, it’s no longer sufficient for supply chain leaders to be just as good as their peers across the state or county; now, they must outperform competitors all around the world. Companies do keep score, and the expectations heighten each year. The best supply chain leaders understand this and rise to the challenge.

Finally, as businesses strive for continuous improvement, supply chain management is a significant contributor and creates ongoing stakeholder value. Sustainability and business continuity are much discussed concepts today. They are all about investing in the supply chain and building infrastructure as a strategic value-creating capability. This infrastructure likely has both a talent and process component. For most companies, gone are the days when global supply chain was merely a transactional function used to support core competencies. This archaic view has now been transformed — replaced with a more long-term perspective, through which the supply chain becomes a core competency.

One executive we interviewed related how the value created by his company’s supply chain has led it to become a key enabler. He explained that he and his team built capabilities that previously had scarcely existed, with leadership as their foundational strategy. First, they added highly skilled professionals to the team in core areas. Then, they integrated all functional aspects of the supply chain and leveraged their scale in practically every area: commodity spending, global sourcing, talent management, and S&OP. If it was a supply chain function, they leveraged it to fuel business growth. The results were impressive. During his seven-year leadership tenure, operating income increased by about 60%. Perhaps even more importantly, supply chain is now viewed as an income generator and a critical part of the overall business strategy.

PUTTING IT ALL TOGETHER

Within the universe of today’s supply chains, the one common principle that is most obvious and, frankly, most compelling, is that leadership is more critical to success than process management. Clearly, as with all complex systems, there is no one-size-fits-all strategy, but when a choice must be made between competing priorities, focusing on leadership achieves the greatest results.

LEADERSHIP INSIGHTS FROM THE INTERVIEWEES

“The real issues occur when there are things totally out of the ordinary to get through. That’s when true leadership comes through — or doesn’t. Leadership makes or breaks your supply chain.”
—Vice president of global supply chain

“Surround yourself with incredible talent — smarter people than you are, people who are willing to work harder than you are — and you’ll probably be successful.”
—President of supply chain

“You can’t drive process excellence without great leaders.”
—Senior vice president of operations and engineering services

“Leadership gets people rallied around how to establish the process that is most appropriate for the situation.”
—Vice president for supply chain and operations

“What’s the fundamental driver of our success? We really, really drank the Kool-Aid on the power of the people.”
—President of supply chain

Broadening the Potential of Holiday Shopping

Fri, 29 Nov 2019 00:00:00 -0600

Although Black Friday and Cyber Monday are technically different events, with the continuing escalation of e-commerce, they are quickly fusing into one giant retail bonanza. This pre-holiday shopping spree is a time for consumers to enjoy deep discounts and BOGO offers; extended business hours; and, for some, a ritual that’s as much about gift-getting as gift-giving.

For retailers, today is of course about the bottom line. However, I am inspired to see that some businesses are giving back, as well. These companies are combining Black Friday’s retail mayhem with Giving Tuesday’s philosophy of charity and compassion. Therefore, by simply buying the presents already on their holiday lists, consumers are helping some very worthwhile causes.

Cosmetics and skin care company Lush has its Charity Pot “philanthropic skin softener,” a lotion with ingredients that are sourced through sustainable projects and support regenerative agriculture. The company also donates 100% of the purchase price (minus tax) to grassroots organizations working in the areas of human rights, animal protection and environmental justice.

Likewise, when you purchase your holiday dining table centerpiece from Arena Flowers, the organization plants a tree in countries experiencing deforestation, such as Haiti, Mozambique and Madagascar. The business also has moved to organic and compostable materials and is removing single-use plastics from its products and global supply chain. “Simple initiatives can make a material difference,” Arena’s website states. “[It] costs a little more, but it’s a price worth paying.”

For the past five years, retail and outdoor recreation company REI has taken this ideal a step further, actually “defying Black Friday.” Through its #OptOutisde campaign, stores are closed today so that its 12,000 employees can experience a paid day off to explore, get some fresh air, spend time with the people they love, or just enjoy some peace and quiet. REI hopes its customers will follow suit.

“It was a big risk,” Chief Customer Officer Ben Steel admits. “People thought we were crazy, and retailers were saying, ‘Why the hell would you give up one of the busiest shopping days of the year?’ To be really transparent, we didn’t know if it would work.”

But the initiative resonated with people, especially those who love spending time outside and worry that, due to climate change and related threats, their children will not have that same opportunity. “That’s absolutely an existential risk for our business,” Steel says. “But more than that, it’s an existential risk for our purpose and our passion.”

Remarkably, REI continues to see revenue increase from this effort. The company has even expanded the program to pledge $1 million to research how time outside affects people’s health.

Giving Tuesday

“Organizations need to do more than just sell stuff,” Steel told Business Insider. “More and more organizations are saying, ‘What does it mean to lead with our purpose? What does it mean to lead with our values?’”

The ASCM Enterprise Certification is helping corporations answer these tough questions and assess the ethical aspects of their supply chains. Certification criteria focus on climate strategy, anti-corruption, human rights, product life cycle stewardship and more. I encourage you to learn about the standards, which serve as both metrics and a diagnostic tool to provide key insights into supplier quality and where supply chain strategy can offer key advancements.

In addition, this Giving Tuesday, please consider giving back to your charity of choice or by donating to our Supply Chain STEM Academic Outreach Program, Student Scholars Program, Case Competition or Mentor Center — or volunteer with a local channel partner. You can help us inspire the industry professionals of today and tomorrow to create a better world through supply chain.

Gathering with Gratitude

Fri, 22 Nov 2019 00:00:00 -0600

Over the years, Thanksgiving has taken on many different meanings: an opportunity to express thanks, a showing of appreciation for family and community, a way to teach young people about our traditions and values. But as the holiday evolves, one thing stays the same: Thanksgiving is about gathering together.

Everyone here at ASCM knows that it is our partnerships, our relationships and our bonds with others that enable the important work we do. With the shared purpose of strengthening supply chains, we gather together to create a better world every single day.

With Thanksgiving just a few days away, I can’t help but reflect on a groundbreaking 2019, made possible by our connection with others. This season, I give thanks for

the volunteers and staff members who helped launch ASCM, with the goal of creating a better world through supply chain via learning and development, corporate transformation, and making an impact.
everyone who helped us build ASCM’s strong foundation — 60 years of industry-leading APICS certifications, education and training
our world-class partners and global alliances, including Accenture, The Bill & Melinda Gates Foundation, Deloitte and PwC, that collaborate with us to fuel opportunities for end-to-end supply chain innovation, deliver essential products and services to people across the globe, and transform supply chain management for today’s increasingly interconnected and digital world
Carey Lohrenz, the first female F-14 Tomcat Fighter Pilot, who shared lessons learned from her career in the cockpit at Mach 2 in order to help ASCM 2019 attendees build stronger teams
the new ASCM Foundation, the philanthropic channel of ASCM that is building frontier and humanitarian supply chains; fostering K-12 supply chain, STEM and career awareness; advancing supply chain workforces; and driving diversity and inclusion in the industry
the talented students from Harvey-Mudd College, who inspired us all with their winning presentation in the 2019 ASCM Case Competition
all of you who took the time to respond to our 2019 Supply Chain Salary and Career Report and indicated that, overwhelmingly, supply chain professionals love their jobs
supply chain leaders from Petrobras, our inaugural ASCM Enterprise Certification designee, for their dedication to environmental, ethical and economic supply chain excellence
The Global Fund to Fight AIDS, Tuberculosis and Malaria, for its grant, which ASCM will use to develop a transformational learning program to support supply chain organizational strength-building activities in Africa
and of course, supply chain professionals, especially our members from all across the globe who are shaping the future of supply chain each and every day.

On behalf of all of us at ASCM, we wish you a joyful Thanksgiving as you gather with family and friends in gratitude.

Prepare for the New Seaborne Trade Low-Sulfur Emissions Standards

Fri, 22 Nov 2019 00:00:00 -0600

Studies show that about 3% of global carbon dioxide emissions can be attributed to ocean-going ships. In fact, if global shipping were a country, it would be the sixth largest producer of greenhouse gas emissions. More than 90% of global trade is carried across the world’s oceans by some 90,000 marine vessels. Still, seaborne trade is much more economical and environmentally efficient than other modes of transportation.

The International Maritime Organization (IMO), part of the United Nations, works to reduce and prevent marine and atmospheric pollution by ships. IMO has been implementing various, gradual guidelines to reduce the carbon footprint so that the industry grows in a sustainable manner and supports a greener economy.

Starting January 1, 2020, IMO will be reducing the limit for the amount of sulfur in fuel oil used onboard ships operating outside of designated emission control areas from 3.5% mass by mass (m/m) to 0.50% m/m. Both crude oil and heavy fuel oil, a type of bunker oil that is derived as a residue of crude oil distillation, contain sulfur. Following combustion in an engine, sulfur oxides are emitted. Sulfur oxide pollution can be harmful to human health; cause acid rain, which hurts crops, forests and aquatic species; and contributes to the acidification of the oceans. Knowing that this policy change could be disastrous for the industry, IMO allows ships to switch to using either compliant fuels or alternative options, as long as those options are effective in reducing sulfur content limits.

Based on this, shipping companies are likely to respond by

using new oil blends that meet the sulfur restrictions
switching to another fuel, such as liquefied natural gas
continuing to purchase heavy fuel oil but install scrubbers to reduce the sulfur oxides output to meet the requirement
using hybrid technology, such as some oil with electric or solar power.

Regardless of strategy, shipping companies will incur large costs in order to abide by the new sulfur emissions guidelines, which could jeopardize their already stressed balance sheets. Maersk Line, one of the largest companies, estimates that these new regulations will result in an increase of $200 million in fuel costs per carrier. Many businesses likely will pass on some of these costs to customers. Major carriers already have implemented a low-sulfur surcharge, which will likely increase in the years ahead.

Experts estimate that freight rates will rise 15-20% as a result of the new emissions standards. In today’s world, where margins are shrinking because of aggressive competition, this increase in freight price could majorly impact a variety of businesses. Here are three possible scenarios.

Case 1: Project-oriented companies with high-gestation deliveries

For contractors, most large-scale projects are awarded on a turnkey basis through an e-bidding system with no clause to factor in an increase in supply chain costs. For example, let’s say Company ABC bids for the construction of a 2,000-megawatt power plant on a fixed rate per unit basis. Because of aggressive competition from other service providers, Company ABC factors minor variations in logistics costs into its budgetary workings, rather than adding protective clauses to its contracts. Company ABC wins the contract but now suddenly faces increased freight costs for its equipment, which is sent via ships from around the world. In this competitive market, where companies work on minimal margins, the 10-15% logistics cost escalation could severely dent Company ABC’s net profitability from the venture.

Case 2: Logistics companies with long-term contractual obligations

Company XYZ is a door-to-door logistics service provider with a core focus on end-to-end project cargo movement. When Company ABC won the power plant bid, it contracted with Company XYZ to transport the power plant’s equipment within a span of 18 months on fixed-rate terms. Although Company XYZ was initially happy with the contract, after the equipment movement started, the new low-sulfur fuel surcharges severely impacted Company XYZ’s bottom line and made the project unviable.

Case 3: Organizations with diversified supply chains competing head-on with localized manufacturers

Global automakers such as MG Hector and Jeep are entering the very competitive Indian mid-segment car market. Assuming their strategies are to import the key components and only assemble the cars in India initially, increases in freight rates could have a negative impact on their pricing. This would make it difficult to match the offerings of local car manufacturers, such as Maruti Suzuki, and delay their market penetration because of lower sales volumes.

In conclusion, although the new IMO regulations will help to protect the environment and should be viewed as a positive step forward, there are many side effects that companies and consumers will need to grapple with. If they have not already, industries, companies and consumers should start budgeting for the inevitable shipping costs increases that are part of greener global trade.

The Journey to Digital Procurement Transformation

Thu, 21 Nov 2019 00:00:00 -0600

Technology’s impact on a business more often than not depends on the business owner’s willingness to adapt. The same can be said for procurement. To successfully lead and capitalize on digital transformations, procurement directors must take into account several key strategic considerations.

The first step in preparing for digital transformation of procurement is to evaluate and potentially redesign the procurement process, as digitizing a bad process leads directly to errors. The next phase is automation, during which the new, digitally enhanced process is established. Then, organizations must communicate objectives and plans to employees, customers and stakeholders. New leadership also may need to be put in place; skills must be assessed and adjusted to meet the new framework. Finally, the company’s digital maturity must be evaluated.

PRELIMINARY STEPS

To begin your digital procurement journey, start with lean thinking — one of the most effective ways to improve business processes. Lean’s goal is to meet customer requirements with regards to service and quality while simplifying operations and reducing waste and lead time. When lean is augmented with six sigma, organizations are well-positioned to achieve data-driven process improvement. The result is a meaningful overall performance improvement.

Next, map your organization’s manual and automated activities. Identify and remove those without value. The main tasks include prioritizing which process to choose for the initiative and selecting the project team. Team members will define the context, vision and strategy. Successful digitization requires envisioning new ways of performing tasks that can benefit from the use of technology, not just finding a way to use these technologies. In other words, it’s crucial to have a vision that embraces different ways of operating — even without a focus on technology.

Procurement directors must build a clear business case justifying the reasons to embrace the digitization. When making the business case for digital initiatives, emphasize how they will add value; for instance, by improving speed-to-market and reducing costs. Keep in mind that the ultimate measurement of procurement’s performance is its ability to support the firm’s overall business strategy. It is critical for procurement managers to improve agility, responsiveness and customer-centricity, all of which are highly enabled through digitization.

Once procurement managers establish a clear digital strategy and the business case is accepted, the initiative must be clearly communicated to employees so they become ambassadors who will lead the change. Toward the end of the preparation stage, a lean procurement committee may be established to receive and approve the proposal of the process.

DEFINE AND MEASURE

Next, the project team listens to the voice of the customer to determine their needs and select the metrics to be measured, monitored and improved. Team members then map the current process state. This exercise consists of mapping the manual operations and understanding how the physical flow is managed. It also incorporates the automated flow ― including applications, systems and automated sequences — already in place.

Processes are most effectively measured when data is extracted from the data warehouse, if available. The involvement of information and communication technology in lean procurement initiatives also enhances the measurement phase. The first part of this stage is to

define the process and issues that the procurement leaders want to improve
choose the project’s main objectives
establish the project team that will implement the initiative
examine the current environment, including organization, vendors, processes and logistics
determine the current and expected product and service requirements
identify opportunities and measure potential benefits
set up the implementation plans.

The outputs of this stage should be incorporated in a master document, such as a project charter, for the stakeholders involved. The charter outlines clear, long-term objectives and targets digital initiatives as well as their impacts on the organization. It includes elements such as process efficiency and savings goals, system capabilities, integration requirements, visibility and reporting capabilities, user engagement, adoption, and supplier enablement strategy.

The second part of this stage is measuring, during which the team

defines and selects the critical quality metrics and key-performance indicators
collects sufficient information to validate the need and quantify the conceivable benefits
determines specific goals to be achieved by the rest of the project
decides on the go/no-go with regards to the rest of the project.

Many initiatives fail during this stage because the team becomes exhausted by data collection activities: Either the data available is very limited or team members are inundated. At this point, it is acceptable to recognize that the project lacks clear benefits and is unlikely to be successful. If that is the case, cancel it.

ANALYZE AND COMMUNICATE

Before beginning this stage, the project team should have clearly proven significant potential benefits from digitization. Team members might also consider a multigenerational project plan because many solutions will require implementation in phases. The project should be simulated on a small scale first, using a pilot to demonstrate the effectiveness of the solution. This could be a single business unit or an element of the plan. Then, prepare for a successful, full-scale implementation.

The process of redesigning might include eliminating non-value-added and unnecessary activities; restructuring operations that create wait times, queues and loss of productivity; outsourcing or centralizing low-value but necessary activities; simplifying and standardizing; and optimizing and automating manual activities. It is important to avoid the pressure to deliver: Rushing jeopardizes success. Progress should be continuous and allow frequent and regular wins.

Finally, keep stakeholders ― especially supply chain partners ― updated, and present a clear and detailed communication plan. Sharing successful milestones makes it easier to manage the project and ensures a lower risk of failure. Obtaining the greenlight from stakeholders helps ensure buy-in, creating a wider set of interests, priorities and requirements. It is likewise important to engage customers in the early stages of the design and selection processes, as their adoption rates will have a high impact on overall project success.

ARCHITECTURE DESIGN

In the architecture design phase, the to-be process is created. This phase outlines the sequence of activities constituting the prospect delivery process. The team must thoroughly plan the technical and functional characteristics of the various activities, components and services that are part of manual and automated flows. They design any interface among activities and synchronize the process flow so it is consistent and connected to the end user.

Integration inside and outside the organization is vital. Identify activities that can be eliminated, improve visibility, and heighten supplier relationship management by integrating e-procurement systems. Then, measure and enhance performance using the metrics outlined in the measure phase and continue expanding automation. Whenever possible, remove administrative bottlenecks, such as those created by approvals.

DEVELOP, TEST AND DEPLOY

There are several objectives to achieve during this stage. The first includes the development of the new physical structure, software and interfaces. Vendors involved in the pilot are prepared for upcoming changes; they may be offered incentives if needed to help ensure their compliance.

The project team again must pay special attention to the communication plan. Regular updates should be scheduled throughout the end of this stage. Clearly outline and communicate the new process to internal teams, then install and configure technology that will support the new processes.

Finally, launch the pilot and start using the new process. Remember that vendors are not machines; it is important to listen to them and be attentive to any concerns they raise. The operational team should also be empowered to voice concerns. The biggest challenge in any major digitization initiative is not technological complexity, but people — more specifically, their resistance to change. Forgo the one-way, broadcasting communication model and instead engage people in enterprise-wide, large-scale communication. Webcasts, internal social networks, discussion forums and blogs are effective tools.

VERIFY

As with any change initiative, it’s essential to constantly monitor the process. Unlike in previous stages, this stage has no discrete end. Of course, procurement leaders should have deadlines and targets based on savings and efficiency, but they should also commit to continuous improvement. Once the simulation is verified, it can be launched on a larger scale.

PEOPLE FIRST

As a final piece of advice, always remember the importance of having skilled, engaged employees. One common challenge that companies face when implementing procurement digitization is a lack of talent. Procurement directors have numerous different options for filling the skills gap. External resources, such as hiring consultants with experience implementing digital procurement initiatives, is an obvious solution. Another possibility is to hire new leaders, either from inside or outside, who bring the necessary skills and can offer a vision that supports the changing culture. Of course, offering learning and development opportunities for current employees is a wonderful way to enhance the digital skills of your workforce, increase engagement and earn people’s loyalty.

Throughout the process, procurement directors also must be open to new ideas that can be built upon the already strong foundation. Supporting and encouraging those people who have the skills to lead new initiatives as they arise is tremendously valuable.

Circular Supply Chains Will Shift SCOR Supply Chain Performance Metrics

Tue, 19 Nov 2019 00:00:00 -0600

Note: This blog post is part of a five-part series called “Toward a Circular Supply Chain: Shifts in SCOR Supply Chain Habits.” Keep an eye out for future posts.

Shifts in supply chain performance

Supply chains enable the organizations they support to achieve nearly any goal. To make this happen, the goals of the organization and of the supply chain, as well as how progress will be measured, must be clear. Circular thinking will shift how supply chains measure performance. These performance measures become critical for aligning stakeholders and networks on strategies and goals.

Performance measurements in SCOR fall into five attribute categories: Reliability, Responsiveness, Agility, Cost and Asset Management Efficiency. These represent the measurements that supply chains directly impact to add value to the organizations they support. They also can be used as central strategies, especially as supply chains become more strategically core to many organizations.

Two notable shifts in performance measurements will be how to measure inventory and costs.

Shifts in inventory metrics

The definition of inventory will be expanded from its current definition under Return on Working Capital. The major types of inventory will expand from raw materials, work in process (WIP) and finished goods (FGs) to also include looped materials that have completed reclaim processing and are ready to be monetized.

In a circular economy, does everything become inventory? In order to properly track and forecast materials throughout their lifetimes, some version of inventory management for waste is required. As a result, new types of segmentations will become standard for tomorrow’s inventory management.

Shifts in cost metrics

The cost performance measure also will shift and expand. Cost will soon be connected closely to supply chain revenue, which currently is tucked under the Asset Management Efficiency category, as by-products from manufacturing processes are captured and monetized. For example, imagine a manufacturing process is done at a slightly higher cost in order to maintain the by-products for the next customer. Although this may drive up cost, the revenue received may outweigh the additional cost. Therefore, these should be taken together and expressed as a total landed value.

Circular thinking also will introduce new cost performance measurements for supply chains. A new cost measurement, such as cost to reclaim, likely will emerge. This goes beyond reverse logistics and describes the entire cost of locating, moving and processing materials as they reenter a loop to be reused by another process.

Shifts in Sustainable SCOR

In SCOR 12.0, there is a special application section known as Sustainable SCOR. The metrics in this section closely align with the Global Reporting Initiative standards and provide a reference model regarding materials, energy, water and waste. Sustainable SCOR provides a good basis for supply chains that are starting their sustainability journey. Circular thinking takes this in a step past sustainability and into a network where the goal is for materials to loop indefinitely.

Shifts to the SCOR model

Read the entire Circular Economy blog series.

Join the circular supply chain community

Find out about the latest news and events about circular supply chains around the world by following this LinkedIn page.
Join a dedicated space to discuss how supply chain can accelerate the transition to a circular economy in this LinkedIn group.

A Little S&OP Clarity

Mon, 18 Nov 2019 00:00:00 -0600

Every so often my head hurts. This typically happens while listening to sales and operations planning (S&OP) critics drone on about the need for executive engagement, reading about how short-armed the planning horizon is, or overhearing people complain about the lack of cross-functional engagement. Hogwash!

No doubt, engaging cross-functional executives in a long-horizon planning process is an optimal S&OP practice. But such comments are nothing more than generic, clichéd excuses for a low-level of process maturity. S&OP is a straightforward process, but practitioners too often make it out to be tougher and more complex than it really is — or should be.

Maybe the real problem is us, not some collective “them,” failing to help us evolve the process. I wonder: Are we engaging our stakeholders correctly?

As supply chain professionals and S&OP leads, we seem to whine a lot. We complain about the things we don’t have, rather than push forward and make the best of what we do have. Add to this a latent sense of insecurity about the relative quality of our processes, which is fostered by an army of software and consulting companies that have led us to believe that every organization should climb the S&OP maturity ladder to a nirvana-like level.

Such thinking is irrational. Many companies function quite well with midrange levels of process maturity and thus have no need — and no desire — to expand. Many of the industry’s talking heads advocate an expansive approach to S&OP. They endorse all sorts of bells and whistles, even though the reality of most S&OP implementations is a narrow, simple model.

Recently, I read a LinkedIn post that illustrated the point clearly. A supply chain consultant named Mark Holloway distilled S&OP down to four simple questions:

How much am I going to sell, and does that match my expectations?
Do I have the capacity and capability to make enough?
How can I sell or make more?
What is the financial impact of all of the above?

When I read this, I responded with a simple, “Amen.” Holloway also recommends a two-track path: First, educate colleagues about why S&OP is important. Second, explain what’s in it for the stakeholders and why they should actively participate — in other words, how S&OP will make their jobs easier.

As a practitioner, I don’t complain about a lack of executive engagement. I ask for it, and if I’m denied, I go out of my way to make sure the next meeting is crucial enough that executives will feel compelled to attend. And if that doesn’t do the trick, I consider that the process maturity may be stunted and weigh additional steps I could take to get buy-in. I work through the maturity gaps one by one, methodically and patiently. Like Rome, S&OP was not built in a day.

Get engaged

To attain executive engagement, I recommend the following steps. First, constantly reeducate stakeholders about the value of the process. At least once per year, I meet with the executive S&OP team and describe how far we have come by using S&OP. I highlight how it has improved forecast accuracy, fill rates and customer service metrics while reducing stockouts, obsolete inventory expenses and the risk of exposure to our working capital. I restate the value proposition — over and over again.

Second, educate new people. I jokingly refer to this as “preemptive S&OP brainwashing.” Every time a new stakeholder comes into our company, I walk them through the process. I show them the steps and provide them with ways in which my group can help them understand supply and demand. I give everyone the same message and description, which provides consistency in terminology and process adherence.

Third, create a connection between the process and the business strategy. At Combe, I align S&OP process steps and meetings with corporate innovation strategies, cost-reduction goals, Walmart on-time-in-full measures, working capital utilization and predictable outcomes. I supplement this with the occasional deep dive into a strategic subject area, adding metrics aligned to the year’s strategy statement or asking the executive S&OP team how they want to track progress. Do not assume that simply having the senior leadership team in the room will make the discussion more strategic. Prompt the conversation. This makes meetings more interesting and relevant to executives.

Finally, I am a strong believer that an S&OP lead should be the process persuader-in-chief. Good persuaders know how to gain and leverage the small intellectual footholds necessary to advance their companies’ S&OP processes toward higher maturity.

Holloway’s straightforward questions should be a guide for all S&OP leads. Use them to focus on the basics and move processes toward the appropriate end state. Persistence and patience are S&OP virtues, and acting (rather than whining) is the only way forward.

The Lifesaving Potential of Drones

Fri, 15 Nov 2019 00:00:00 -0600

Reading current news headlines, it’s clear that the global supply chain landscape is constantly being reshaped by innovation. This past week, it was drones garnering much of the media attention.

Wing, Alphabet’s X lab drone, was reported to have completed 80,000 tests since 2014, leading to new collaborations with Walgreens and FedEx for food and beverage delivery. In addition, Alphabet is working with Southwest Virginia retailer Sugar Magnolia to distribute a range of sweet and savory treats, gifts, stationery, and paper goods.

In the coming months, Amazon will test its much-hyped Prime Air service in a to-be-determined location. The company says the drones will depart directly from fulfillment centers with Amazon Prime packages on board.

Uber’s drones will land right on top of Uber Eats driver vehicles, and a thermal feature will be contained within the drones to keep food items cold or hot. Uber has completed tests at a McDonald’s neighboring San Diego State University, and nearby residents soon will be able to order drone-delivered meals.

Going beyond convenience to actually protecting lives, entomologists Bart Knols of Radboud University, Richard Mukabana from the University of Nairobi and social entrepreneur Guido Welter have come up with the idea to use drones to spray a control agent in Tanzanian rice paddies, a natural mosquito breeding habitat. Malaria infects more than 10 million people every year in Tanzania, killing 80,000.

Across the ocean, UPS and CVS announced they have completed the first U.S. deliveries of prescription medicines — one directly to a consumer’s home; the other to a retirement community. The drones launched from a CVS store in Cary, North Carolina, then hovered about 20 feet over the properties before slowly lowering the medicines to the ground.

CVS President Kevin Hourican says this demonstrates what’s possible for customers who can’t easily get to stores: “CVS is exploring many types of delivery options for urban, suburban and rural markets,” he adds. “We see big potential in drone delivery in rural communities.”

According to McKinsey & Company, when it comes to rural areas, drones are surprisingly cost-competitive, at just 10% more than the price of typical delivery models. The firm predicts that rural drone deliveries could comprise 13% of anything-to-consumer deliveries by 2025.

Supply chain research for a better world

ASCM is committed to supporting academic institutions that are researching how emerging trends can advance supply chains and ultimately create a better world. One of our recently awarded grants enables professors at the University of Missouri – St. Louis to explore drone use in less developed countries, where lack of vaccines contributes to high death rates. The professors also are investigating how drones can successfully deliver vaccines to remote communities while overcoming challenges related to maintaining the cold chain during travel.

The ASCM Research Subcommittee is currently seeking grant proposals focused on emerging trends, processes, techniques and technologies that will have an impact on supply chains and value networks of the future. The deadline is January 31. We invite you to download the guidelines and submit your proposal here.

Circular Supply Chains Will Shift SCOR Supply Chain Processes

Tue, 12 Nov 2019 00:00:00 -0600

Note: This blog post is part of a five-part series called “Toward a Circular Supply Chain: Shifts in SCOR Supply Chain Habits.” Keep an eye out for future posts.

SCOR processes shift from linear to circular

The supply chain processes in the SCOR model may be the most widely recognized and leveraged part of the reference model. A shift from linear SCOR processes to circular SCOR processes will impact the relationship among the processes. Although bending a linear process graphic into a circle is hardly revolutionary, the work it will take to enable this process flow to happen certainly is.

Shifts in existing processes will happen over time but undoubtedly will affect the entire model. Imagine, for example, the shifts that will come to the Source processes. Instead of tracking commodity markets, tomorrow’s sourcing managers will need to find alternative sources of raw materials to use in their processes. For example, ocean plastics are becoming an increasingly prevalent source of raw materials, which will no doubt supply future operations. This means that tomorrow’s sourcing managers will become experts on the reclaim markets.

Examples of two SCOR process categories that should be expanded beyond their current state are Return and Make.

Return processes shift and expand

In circular supply chains, the Return process will become the Return and Reclaim process, preparing materials to be used again and again. Such preparations will include activities to reuse, repair and refurbish, remanufacture, repurpose, recycle, or recover materials, according to the Organisation for Economic Co-operation and Development. Then, these materials are complemented by any additional items needed by a buyerand can move into the next process step, Make and Refurbish.

Make processes shift and expand

The Make process will become Make and Refurbish to cover the wide variety of reusing and remanufacturing activities. This expands the manufacturing process to include the additional processes and activities required to return materials to the global marketplace in a circular economy.

Additionally, manufacturing processes will become smarter through industry 4.0 technologies. These smart processes will predict the timing, location, quality and quantity of manufacturing by-products. These by-products enter the circular economy and continue to loop through processes.

Service processes shift and expand

An additional process will become critical in the SCOR model to support circular supply chains. The idea of Service will represent the growing focus on repair and maintenance activities to keep equipment functioning longer. Service also will include the role of a product as a service. This new, flourishing category includes clothing as a service models, like Rent the Runway, and cars as a service models, such as car@go. Outcome as a service models, such as GE Aviation’s Power by the Hour, will become more relevant in industrial fields. All of these models will be enabled by industry 4.0 technology.

Shifts to the SCOR Model

Read the entire Circular Economy blog series.

Join the circular supply chain community

Find out about the latest news and events about circular supply chains around the world by following this LinkedIn page.
Join a dedicated space to discuss how supply chain can accelerate the transition to a circular economy in this LinkedIn group.

Cascading Sustainability Commitments

Mon, 11 Nov 2019 00:00:00 -0600

When “Working Green” first launched more than 11 years ago, the world was clawing its way through the Great Recession. Though the concept of sustainability seemed to be gaining momentum, many were skeptical, and investment in going green was limited. In that context, the authors chose to focus on sustainability issues as supply chain professionals would and use this department to highlight best practices, pitfalls and key lessons learned. By taking this approach, we hoped to provoke thought and promote the exchange of ideas.

In our first year, we also stressed the importance of understanding end-to-end operations and the benefits of measuring and eliminating waste. We believed in 2008 — and we believe now — that when you measure things and push your suppliers and customers to do the same, you maximize the opportunities for improvement throughout the extended supply chain. This kind of collaboration enables the entire network to be more integrated, improve efficiencies and eliminate waste.

Also in 2008, CDP (known then as the Carbon Disclosure Project) was formed. Initially, the organization had 19 members, each of which committed to sharing its environmental impact and agreed to request the same information from its suppliers. The operative belief was that procurement has considerable power to drive positive change well beyond what might be achieved by focusing exclusively on areas within a company’s direct operational control. In other words, an organization’s extended supply chain has a much greater environmental impact than a single member company itself.

The CDP has experienced major growth in the past decade, expanding to 115 member organizations across the globe. Those businesses collectively represent $3.3 trillion in procurement spending. They have submitted disclosure requests to nearly 11,700 of their suppliers, asking for details about relevant impacts related to climate change, deforestation and water. More than 5,600 companies in 90 countries responded to the request. Those businesses reported 2018 emissions savings equivalent to 633 million tons of carbon dioxide — more than 1 percent of all global emissions. Moreover, aggregate cost savings among those companies totaled $19.3 billion, underscoring a point we’ve made from the outset: Environmental stewardship makes good business sense.

CDP’s Chief Executive Officer Paul Simpson summed up the power of procurement this way: “Large public and private sector organizations really can lead effective change through using their substantial procurement spend as a powerful lever for action. If others can follow their example, and suppliers continue to cascade good practices and commitments further down the supply chain, this can play a huge role in the rapid transition to a sustainable, low carbon economy.”

Earlier this year, 43% of CDP Supply Chain program members confirmed that they are deselecting suppliers based on their environmental performance. An additional 30% say they are considering taking that action very soon. In other words, 73% of CDP Supply Chain program members expect to deselect suppliers if they fail to meet prescribed environmental standards.

Also, more than 525 investors, with a collective $96 trillion in assets, are requesting information on climate change, deforestation and water consumption. This will continue to drive the sense of urgency companies are feeling to reduce environmental impact. To be sure, transparency drives actions, actions drive results, and results drive organizations to become more efficient and push their suppliers to do the same.

Hugh Jones, managing director, advisory, at the Carbon Trust, expressed a position that supply chain professionals increasingly are embracing: “There’s so much shared value to be found in greening the supply chain, which can help to increase efficiency, reduce resource costs, enter new markets, and make supply chains more resilient to the impacts of a changing climate and changing world.”

We completely agree. Jones’s statement summarizes many salient aspects of operational professionals’ agenda: efficiency gains, cost reductions, growth, and risk management. This is an exciting time to be working in the supply chain field. Clearly, the opportunities to make a difference are considerable.

Is Your Supply Chain Recall-Ready?

Fri, 08 Nov 2019 00:00:00 -0600

Supply chains are built on trust. We trust our suppliers to deliver product on time and to established specifications. Our suppliers trust us to be open and operate with fairness and integrity. We trust our employees to support the company mission through their performance, contributions and ongoing engagement. They trust us to compensate them fairly, provide learning and development opportunities, and create a positive environment in which to work. And of course, our customers trust that all of these aspects align in order to ensure they receive a high-quality and safe product.

So, when that product is damaged, defective or — worst of all — dangerous, trust is shattered.

“A product-recall event can cause a company to lose everything it has struggled to build for an entire lifetime,” says Barbara Randall, divisional vice president of Great American Insurance Group’s product recall unit. She adds that the costs associated with recovery, repair or replacement of affected products, as well as restoring brand image and regaining lost customers, are the most severe impacts.

“Product safety regulation and the recall process are part of a complicated and imperfect system that varies widely depending on the type of product, the industries involved, and the government agencies tasked with overseeing it,” writes Rachel Rabkin Peachman for Consumer Reports.

To position your supply chain for recall success, PwC’s Sally Bernstein says you must be prepared to take prompt, definitive action. “Many companies spend the crucial first 48 hours scrambling,” she explains. “The result is the recall issue continues to grow.”

Bernstein advises forming a “pivot point” team whose members guide cross-functional collaboration, are empowered to oversee the recall process and report to an executive sponsor. The team assesses scope; tracks and documents recall activities, costs and key performance indicators; and quickly and accurately responds to stakeholder requests for information.

Great American Insurance Group’s Randall adds that it’s essential to have a formal recall policy, full traceability procedures and a quality-control manual. This should include implementation of required and necessary measures for food, consumer goods or component-part product safety.

Essential education

How often do you consider if your food, medicines, appliances, transportation and technologies might be anything other than safe and effective? For most, it takes the disturbing news of a product recall to make us stop and wonder. Of course, supply chain professionals must be continually aware and fully equipped to act.

To help you achieve this critical objective, look to the ASCM Supply Chain Learning Center and ASCM Seminars. These one-day educational sessions are led by expert instructors who take a deep dive into one specific topic, such as supply chain risk management. The Supply Chain Risk Management seminar will expose you to the global supply chain risk landscape; new techniques, tactics and real-world case studies; and the knowledge you need to create a truly resilient supply chain.

Attendees receive 7 core contact hours toward the APICS Risk Management certificate, as well as APICS certification maintenance points. Take the first step in safeguarding your supply chain and everyone it touches at ascm.org/risk.

Toward a Circular Supply Chain: Shifts in SCOR Supply Chain Habits

Tue, 05 Nov 2019 00:00:00 -0600

Note: This blog post is part of a five-part series called “Toward a Circular Supply Chain: Shifts in SCOR Supply Chain Habits.” Keep an eye out for future posts.

Today’s global wealth has been built with the power of a linear economy, which is supported by linear supply chains around the world. These supply chains move materials from extraction to refining and processing operations; to a series of manufacturing plants; through ports, warehouses and cross-docks; and finally to the point of use. Most of this movement happens in a one-way flow.

Economy shifts from linear to circular

A circular economy offers a different strategy to achieve an organization’s goal — through fully exploiting material and resource value and truly squeezing out every bit of value. Instead of materials flowing in a line for one-time use in a linear economy, materials instead loop through many life cycles indefinitely in a circular economy. This is a dramatic shift.

These materials can loop within the same company, among different companies and across multiple industries. These loops produce value for both buyers and sellers. They connect the waste and by-product outputs from the seller’s processes to the buyer’s raw material needs as process inputs, creating a loop.

Imagine: All waste and process by-products in the world will become the raw materials and inputs needed by all the processes in the world. As a result, the maintenance, refurbishment and remanufacturing industries will dramatically increase in size and value. These circular business models will collectively add $4.5 trillion to the global economy by 2030.

Supply chain shifts from linear to circular

To realize this value, effective supply chains across the global economy are required. Supply chain habits used in today’s linear economy will shift in many ways. Some shifts will be small; others will be dramatic. This blog series explores a few of the supply chain habits that will shift as our global economy accelerates the worldwide shift from linear to circular.

The supply chain habits that make up our ways of working have already shifted throughout the four industrial revolutions in the last 250 years, and new economic models have emerged from them. Today’s supply chain habits are captured in the continuously updating Supply Chain Operations Reference (SCOR) model, which has led the global supply chain community since 1996. This resource pulls together a practitioner’s reference model that covers performance, processes, practices and people.

SCOR shifts from linear to circular

The process steps of the SCOR model describe a linear model: flow of information, money and goods up and down a linear supply chain. Imagine if the information, money and goods instead flowed throughout endlessly looping supply networks and industrial ecosystems in an omnidirectional value exchange.

During the transition to a circular economy, supply chains will be impacted and will need to shift their habits and capabilities. These shifts will eventually be reflected in the SCOR model to anchor discussions across the global supply chain community. This series explores a few examples of potential impacts to the SCOR model, including shifts in existing habits and shifts in additional habits.

As resources circulate among networks and ecosystems, supply chains around the world will be challenged to shift their habits to support new business models. This will unlock the next major economic revolution which already is unfolding globally with Industry 4.0. The increased complexity that will be managed by global supply chains will be represented by future SCOR model versions.

Join the circular supply chain community

Find out about the latest news and events about circular supply chains around the world by following this LinkedIn page.
Join a dedicated space to discuss how supply chain can accelerate the transition to a circular economy in this LinkedIn group.

Be a Fast-Paced Supply Chain Influencer

Fri, 01 Nov 2019 00:00:00 -0500

In today’s social media-driven world, consumer opinions and demands can shift overnight. A seemingly ordinary item can become part of the next hottest trend as soon as an Instagram influencer, YouTuber or other social media celebrity posts a photo or video about the item.

This creates a challenging business environment for the overall consumer goods industry. Item manufacturers must be agile enough to almost instantly change their designs and production plans. This also means having nimble suppliers who can quickly provide needed materials or inventory as well as flexible distributors who can increase deliveries or delivery speed to move new products to customers.

One industry that seems to have a handle on this speedy supply chain changeover strategy is the fast-fashion industry. Clothing brands such as Zara have figured out how to cultivate well-rounded teams of designers and patternmakers, a reliable global supplier network, and the right information to tap into consumers’ current and future desires. This enables Zara to release new products as often as twice a week and move products from the design phase to store shelves in about three weeks.

Zara’s supply chain speed has made its parent company, Arteixo, Spain-based Inditex, one of the largest fashion retailers in the world. Undoubtedly, one of the keys to its success has been its willingness to embrace technology to improve its supply chain operations. Just-Style, a research and news outlet targeting the apparel and textile industry, outlines four stages in the digital transformation of fast-fashion supply chains, starting from basic technology implementation with siloed operations and data and growing to total embracement of digital technologies to analyze data, automate decisions and better predict future trends. The more mature stages of this scale involve more technology implementation but deliver the most benefits to supply chains.

Roit Kathiala, the article’s author, goes on to describe how digitized supply chains can help fast-fashion companies meet their speed, quality and sustainability goals. Digital technologies will enable better planning, forecasting, logistics, distribution center planning and shipment efficiencies and support improved supplier-customer relationships. Furthermore, better analysis of consumer insights, improved resource allocation, and more eco-friendly manufacturing and shipping methods will help companies meet consumers’ quality and sustainability expectations.

Going digital

These supply chain trends in the fast-fashion industry will soon be a reality for supply chains across all industries. Consumers are expecting better-quality products faster while balancing corporate social responsibility factors. The answer to this challenge will be digital supply networks, which are interconnected, more open versions of traditionally linear supply chains.

ASCM delivers the tools your organization needs to establish and grow its digital supply network. In partnership with Deloitte Consulting LLP, we have released the Digital Capabilities Model for Supply Networks (DCM), which is designed to help users understand the complexity of digital supply networks and assess an organization’s process maturity. The model also is closely tied to the Supply Chain Operations Reference (SCOR) Digital Standard in order to help companies immediately apply the new model without restructuring their processes, metrics or practices.

According to my colleague Chris Richard, principal, high-tech sector lead for supply chain and network operations at Deloitte, DCM users will be able to stay ahead of changing business needs and respond more quickly and with greater agility. Furthermore, the DCM will continuously coevolve with users and the industry trends that affect them to continue to keep organizations ahead of the curve.

To learn more about the DCM and assess your organization’s digital readiness, visit dcm.ascm.org.

Generate Worth from Waste

Fri, 25 Oct 2019 00:00:00 -0500

Here in ASCM’s hometown of Chicago, about 55 million pounds of food is wasted each month, despite the fact that one in six Chicagoans suffers from food insecurity. Alan Reed, executive director of nonprofit Chicagoland Food & Beverage, says this regrettable fact is what compels his organization to work with both industry and food banks “in order to find new and innovative ways to address these issues.”

Reed’s comments remind me of a recent Wall Street Journal article, which highlights why some food and beverage industry giants are starting to see their trash cans in a different way — as an exciting new value stream. Starbucks is reprocessing the outer layer of its coffee beans into a natural sweetener. Mondelez is making snacks from parts of the cacao plant unused during chocolate production. And Kellogg Co. is collaborating with a craft brewer to ferment discolored cereal that would normally become animal feed. The first runs of Cast Off Pale Ale (made from Rice Krispies) and Sling It Out Stout (made from Coco Pops) sold out in hours.

Some clothing manufacturers are even turning food waste into leather alternatives. “This is not just a solution to the problem of waste,” Carmen Hijosa, founder of Ananas Anam, told The Journal. “It also brings a new income stream.” Her a company works with pineapple farmers in the Philippines, who traditionally would have burned or left leaves to rot after harvesting. The resulting leather alternative, Piñatex, is now used by Hugo Boss to make shoes; for a sustainable-clothing line at H&M; and at Hilton Worldwide, which covers footstools with the material for what the company calls vegan hotel rooms.

Learn from the best

Five inspiring presentations are currently being shared on “Foodbytes,” the blog of food and agriculture financial services provider Rabobank. These food technology innovators discuss what they believe to be the most pressing industry challenges, as well as some exciting potential solutions. One of these involves packaging that can sense when a company’s distribution, handling and warehousing processes are increasing the risk of food spoilage. By pinpointing the problem area, this tool can bring about smarter supply chains.

The value of learning from industry trendsetters such as these cannot be overstated. This is why ASCM is dedicated to finding truly exceptional presenters for ASCM 2020, September 13-15, in New Orleans. We are seeking speakers who can help us shape the future of supply chain by communicating front-line industry knowledge, valuable real-world case studies and the latest supply chain breakthroughs.

The call for presentations is open through December 2, 2019. Don’t miss this opportunity to share your unique experience and perspectives with the global ASCM community.

Expose Modern-Day Supply Chain Slavery

Thu, 24 Oct 2019 00:00:00 -0500

If you are like many supply chain professionals, you wonder about the corporate social responsibility and ethical standards in the far tiers of your supply chain, particularly those in developing countries. You hope people are receiving adequate wages, have a safe environment in which to work and are given decent supervision. Yet, there is an uncomfortable reality that must be acknowledged: Slavery is alive and well in many areas of today’s supply chains. Some workers have entered debt-bondage arrangements — sometimes by being tricked and other times because they had no choice. What has resulted is a crisis that continues to elude many supply chain professionals. But there are things you can do to help put an end to it.

How We Got Here

It is impossible to determine the exact number of slaves in the world today, but the International Labour Organization estimates that there are almost 25 million victims of forced labor worldwide. In order to understand how someone becomes a slave, it is necessary to first recognize the migration patterns of workers and why they leave one nation for another. This process begins when someone departs his or her home country to seek a better economic opportunity or, in extreme cases, safety from war or political instability. In recent years, one only needs to witness the mass exodus of refugees from Syria and many African countries into southern Europe to see an example of the migration patterns.

Unethical labor agents prey on the poorly educated and those from regions of extreme poverty. These people are especially vulnerable to entering a forced labor situation and becoming a slave. They are at an even bigger disadvantage upon entering a new country, as they rarely speak the language or understand local customs. This makes them extremely easy to exploit.

People are forced to work in low-skilled jobs, such as those found in agriculture, food processing, fishing, textile manufacturing, electronics, mining and domestic work. Even if your industry is not represented here, it is likely your suppliers use core components from this list. For example, scarce metals and minerals are components to the electronics industry, and those components can go into just about anything of an electrical nature. In Thailand, the shrimp industry has harbored slavery on fishing boats that supply small fish to feeding mills, which then supply food to shrimp farms. Likewise, slavery has been found in the U.S. crawfish industry. For a brief period, it was identified in the iPhone supply chain.

Labor agents can serve a legitimate function for migrants by assisting them in navigating the complicated maze of government bureaucracies. However, this relationship is commonly exploited by dishonest agents. Also, a prospective worker will encounter at least two, and possibly more, labor agents in their transition from their home to another nation.

The first agent, who is really nothing more than a human trafficker, approaches the potential worker with promises of a good job in another country. In fact, this job is probably so detestable that few people would ever want it. High fees are charged to the potential worker, who, of course, cannot pay. However, this person is so desperate for work that he or she agrees to the arrangement and begins accruing a debt that there is very little chance of ever repaying.

The first labor agent then arranges for the migrant to cross the border into a neighboring country. Upon arrival, the worker is met by a second labor agent, another human trafficker, who immediately demands additional fees. Because the person cannot pay, this new obligation is added to the initial debt, thus creating an indentured servant arrangement. Any wages earned are allocated for food and housing for the worker, so little, if any, money can be used to pay off the labor agent debts. But these agents are indeed paid. They receive compensation from the companies buying the workers. Once that transaction is complete, the cycle begins again as the labor agents look for more people to bait and trap.

Figure 1 depicts a domestic company, on the far right, with its corresponding supply chain in tiers to the immediate left. The domestic company is often a multinational corporation, such as a major retailer or clothing brand. Its suppliers are sourced by other suppliers, labeled tier two and tier three. Of course, in the real world, supply chains can extend to many more tiers, with each move to the left giving the domestic company less control.

The April 24, 2013, Rana Plaza factory that collapsed in Bangladesh, killing more than 1,100 workers, was an example of using a secondary supplier to augment capacity. This practice is common in some sectors of the garment industry. Several major brands were surprised to find their labels being made at Rana Plaza because they had not authorized work to be done there.

The term shadow factory has been used to describe suppliers hired to augment either the capacity or production process needed by the original supplier. In the garment industry, labor-intensive activities such as beadwork, sewing and dying may be subcontracted to unregistered shadow factories. Just as with tier two and tier three suppliers, shadow factories are not monitored like a tier one supplier would be — in fact, they may not be monitored at all.

The Way Forward

Following are five clear steps to solve the problem of modern-day supply chain slavery.

Maintain the integrity of your supply chain. Before globalization, our supply chains were vertically integrated. Now, they can extend around the world. What an awesome responsibility this is, to both the victims of human trafficking and your company’s good reputation. If just one part of your supply chain is tainted, the whole network is at risk. Therefore, step one is recognizing that fostering human rights is an essential part of being a good supply chain manager.
Know what’s going on. Never forget that your tier one suppliers are supplied by their own suppliers, and so on. Your network may have thousands of suppliers at tier two and beyond. Begin addressing this dilemma by mapping your company’s entire supply chain — a formidable task that likely feels overwhelming. But new solutions, technologies, due diligence and analytics all can help. Research these options and network with other supply chain professionals to augment your knowledge in this area.
Go beyond codes of conduct. Many companies will instill codes of conduct at their tier one suppliers with the expectation that the suppliers will do the same. The intent is to create a ripple effect that permeates the entire supply chain. Unfortunately, codes of conduct are rarely universally successful. Abiding by a code of conduct requires resources, which means raising the per-unit product cost. Of course, the business wants both ethical standards and affordability, but the supplier may have no idea how to achieve these twin goals. This often leads to the use of shadow factories, sweatshops and modern-day slavery.
Tap into non-governmental organizations (NGOs) to help you maintain a slavery-free supply chain. A number of NGOs have emerged to assist companies as they work to map and monitor their networks. Verité, Know the Supply Chain and a host of others work with companies to help them take the necessary steps. Interestingly, one NGO was founded by Andrew Forrest, CEO of the Australia-based Fortescue Metals Group, after stumbling across slavery in his supply chain. The business worked with the supplier and convinced them to make changes. Later, Forrest started the Walk Free Foundation, an NGO with a mission to end slavery in this generation.
Finally, just don’t go there. It’s always wise to stay away from questionable suppliers. This should go without saying, but many companies continue to fall into relationships with businesses that should have long ago been abandoned. Remember, it is never worth the price drop to risk doing business with a supplier endorsing modern-day slavery

The ASCM Enterprise Certification enables corporations to assess the ethical, ecological and economic aspects of their supply chains. Criteria focus on anti-corruption, human rights, enterprise risk management, climate strategy, product life cycle stewardship and more. Learn about the ASCM Enterprise Certification at ascm.org/enterprise.

High-Skilled Manufacturing Jobs Create Positive Social Impact in Africa

Fri, 18 Oct 2019 00:00:00 -0500

The Mara Group, developer of Africa’s first high-tech, smartphone factory, has begun selling two types of phones. President Paul Kagame says this is a breakthrough development for his country that will put smartphone ownership within reach of more Rwandans. He called Mara’s facility “a complex manufacturing operation requiring significant technical skill and expertise.”

In Rwanda, internet penetration currently stands at 52.1%, up from 7% in 2011. Phone penetration has grown to 80.6%, from 33% in 2010.

“The smartphone is no longer a luxury item,” Kagame said at a press conference. “It is rapidly becoming a requirement of everyday life.”

CNN reporter Kieron Monks says the smartphones manufactured at Mara’s facility are intended to address a widespread need for fast, reliable internet; build digital literacy; and contribute to the nation’s rapid economic growth, as well as its potential to become an economic leader and innovation hub.

Mara CEO Ashish Thakkar says that by providing high-quality, affordable smartphones, his company can help create positive social impact and financial inclusion throughout the continent. He also stressed his organization’s commitment to supporting advancement in Rwanda, noting that 90% of the 200 factory employees are Rwandans and 60% are women.

The Rwandan government’s Digital Ambassadors Program aspires to achieve 100% digital literacy among people 16-30 years old and 60% of the adult population by 2024. Paula Ingabire, Minister of Information and Communications Technology and Innovation, says she hopes Mara’s plant will play a key role in creating higher-skilled manufacturing jobs, improving access to mobile services and driving financial inclusion in rural communities.

Conveying supply chain know-how

This week, ASCM announced that we received a grant from The Global Fund (TGF) to Fight AIDS, Tuberculosis and Malaria. It will be used to develop a long-term, transformational learning program in Africa, starting in Nigeria. We are proud to support TGF’s supply chain organizational strength-building activities and play our part in developing sustainable solutions that address critical supply chain challenges.

The initiative focuses on heightening the capabilities of leaders, professionals and the public workforce to maximize learning, development and organizational transformation. Key tenets include the following:

ASCM will train 1,500 Nigerians through a 10-course program. The curriculum will give them the skills they need to build and run effective supply chains in their local markets.
African leaders at the national, state-regional and local levels will participate. These stakeholders will generate an improvement portfolio and organizational capability-building plan while earning the industry-leading APICS SCOR-Professional and Certified Supply Chain Professional designations.
Key partners and instructors will help implement the organizational capability plan using the best-in-class APICS Certified in Production and Inventory Management and Certified in Logistics, Transportation and Distribution designations, as well as ASCM’s online education platform, Principles on Demand.

ASCM’s partnership with TGF will shape and improve the lives of Africans economically, environmentally and socially. I encourage you to learn more about the ASCM Foundation and how it is leveraging our globally recognized content and certifications to make a difference for people and communities around the world. Visit ascm.org/making-an-impact today.

Collaborating to End Modern-Day Slavery

Fri, 11 Oct 2019 00:00:00 -0500

Last week, Cape Town hosted the International Federation of Freight Forwarders Associations (FIATA) World Congress 2019. Activists and lawyers from around the world shared information about the escalating modern slave trade and the millions of victims being exploited in global supply chains today.

Forced labor in the supply chain goes beyond dangerous or substandard working conditions, Melbourne-based attorney Frazer Hunt pointed out. “People are enslaved across the spectrum — from farming, domestic work and construction to clothing factories, mines and the beauty industry.”

Narit Gessler, director of development for nonprofit organization Free the Slaves, said the problem is far more common than people think. “The chances are good that you have had modern slavery in your supply chain,” she said. “It’s in the food we eat and the clothes we wear.”

Katie Modrau, the South African country manager of nongovernmental organization A21, noted that people who are unemployed and poverty-stricken are especially at risk. In her own country, 54% of people are susceptible to human trafficking schemes, according to the 2018 Global Slavery Index.

Break the cycle

All victims of human trafficking and forced labor have one thing in common: vulnerability. These people are promised a better life for themselves and their families and often see no other option than to believe what they are being told. The first step to their liberation is increasing awareness.

The cover story of the brand-new edition of SCM Now magazine provides valuable information that you can use to spread this critical message, better understand the problems and begin finding solutions.

Author William “Rick” Crandall, Ph.D., writes: “If you are like many supply chain professionals, you wonder about the corporate social responsibility and ethical standards in the far tiers of your supply chain, particularly those in developing countries. You hope people are receiving adequate wages, have a safe environment in which to work and are given decent supervision. Yet, there is an uncomfortable reality that must be acknowledged: Slavery is alive and well in many areas of today’s supply chains.”

In the article, he shares five clear steps you can take to help address the issue. Crandall also will present a free webinar later this month where ASCM members can learn more about the realities of globalization and its impact on supply chains. Participants will discover insights into how slavery gets into a network, ways to ensure your organization sees what is happening beyond tier 1 and proven strategies for how you can help.

Read the article, then register for the SCM Live webinar today. Together, we can wipe out supply chain slavery.

Is Blockchain the Remedy to Health Care Logistics Issues?

Fri, 04 Oct 2019 00:00:00 -0500

Increasingly, pharmaceutical companies are putting blockchain to the test in order to track and trace the drugs they manufacture and ship. In fact, according to Healthcare Weekly, blockchain is “getting massive attention” in health care, with 40 percent of industry executives reporting that it is one of their top five priorities.

Blockchain, a decentralized network that shares information with participants in real time, has clear potential to transform and advance health care logistics, transportation and distribution. “The technology offers a potential solution to a number of challenges,” write J. Mark Waxman, Kyle Faget and Ben Daniels for Medical Economics. “The ability of blockchain to track and store data chronologically across a peer-to-peer network makes the technology particularly well suited to solve for the traceability requirements imposed by the Drug Supply Chain Security Act. In addition, blockchain is uniquely secure, which could reduce common issues in drug supply, such as drug counterfeiting.”

The authors note that, currently, no one source has all the transfer information as a medicine makes the journey from manufacturer to dispenser. “Pinpointing a product’s position in the drug supply chain requires an accurate accounting of a product’s chain of custody,” they explain.

A recent Cointelegraph article shares how one company is working to achieve this pharmaceutical supply chain precision. Blockchain startup MediConnect offers a solution that will enable tracking and managing of prescription medication through the supply chain while preventing misuse.

Author Ana Alexandre writes that, earlier this year, the Ugandan government partnered with MediConnect to trace counterfeit drugs within the country. “The blockchain-based platform enables the recording of prescription medication, thus identifying counterfeit drugs and preventing their distribution in the pharmaceutical supply chain,” she says, adding that the potential of blockchain in health care is also recognized by the United Arab Emirates’ Ministry of Health and Prevention, which launched a blockchain system for recording and sharing health care data.

Arm yourself with knowledge

One of the most interesting aspects of blockchain is that it requires no trust from users but delivers trustworthy transactional data. As a result, supply chains around the world are benefiting from a whole new level of transparency into the status and location of their goods.

As Ron Crabtree, CIRM, SCOR-P, explains: “The opportunities for logistics, transportation and distribution companies are truly endless, as the often painful process of making sure everything is done right throughout a value stream becomes much less stressful and error-prone. Indeed, many experts agree that blockchains are generating a less expensive, reliable way to know the status of a transaction.”

One way to ensure that you have the latest industry-leading skills and knowledge is by becoming Certified in Logistics, Transportation and Distribution (CLTD). This APICS designation will help you understand and maximize new supply chain technologies, trends and solutions. The CLTD program gives you everything you need to effectively demonstrate in-depth expertise of essential concepts in order to streamline operations, boost your organization’s bottom line and set you apart from your peers.

Begin your CLTD journey today.

Harnessing the Power of Supply Chain

Fri, 27 Sep 2019 00:00:00 -0500

At ASCM, we know the world of supply chain is bigger than boxes stacked in a warehouse and containers crossing an ocean. Supply chains are evolving at an extraordinary rate, reaching everyone and everything. This is why it is more essential than ever before to make an impact by fulfilling our responsibility to create a better world through supply chain.

As the global authority in supply chain, ASCM is uniquely positioned to set the pace of change and positively shape the world in which we live for people everywhere. People are at the heart of everything ASCM does, which is why I’m so excited to announce that we are launching the ASCM Foundation.

A recent Forbes article describes the ways in which this new philanthropic channel of ASCM is taking ambitious new actions in collaboration with corporations, nonprofits and private foundations in order to address pressing global challenges. We are mobilizing supply chain communities, skilled leaders and visionary partners, introducing opportunity and solving critical problems that affect countless lives.

The Foundation leverages ASCM offerings and the APICS body of knowledge — the global standard in professional development for 60 years — to launch and expand a set of bold, strategic initiatives that draw on the power of supply chains. Priorities include

building frontier and humanitarian supply chains that support Ministries of Health in sub-Saharan Africa as they enhance the capabilities of industry professionals and country-based communities of practice to give people consistent and affordable access to food, medicine, vaccines and other life essentials
providing K-12 supply chain, STEM and career awareness opportunities that educate and engage future supply chain professionals and address the skills shortage
developing diversity and inclusion initiatives that ensure people of all profiles and backgrounds can do meaningful work, share perspectives and succeed in supply chain careers
amplifying supply chain workforce development, including career training, supply chain certification resources and content development with academic institutions in order to put people on a meaningful path toward high-quality, rewarding jobs.

This is just the beginning of the supply chain transformation that ASCM and its Foundation can bring forth. With your organization’s support, the possibilities are truly boundless. Please help us by introducing the ASCM Foundation to decision-makers and encouraging them to become our partners. Connect us with your corporate social responsibility executive. Help us access other corporate, nonprofit and private foundation leaders.

ASCM stands ready to move forward, maximizing our industry-leading perspectives and initiatives in order to enact real change. Your organization can play a critical role in helping us harness the power of supply chains to create a better world.

Keep Your Warehouse Properties on Track

Wed, 25 Sep 2019 00:00:00 -0500

Now that we are in the midst of the Fourth Industrial Revolution, the world is changing rapidly in the face of exponential innovation that will permeate every facet of life. The way we do business and interact with each other is undergoing a shift not seen since the first Industrial Revolution. New technologies — such as the internet of things, artificial intelligence and robots — are changing the way companies operate. At the same time, consumer expectations for customized products; product transparency; and fast, on-time delivery are putting increased pressures on supply networks.

This changing ecosystem is forcing a strategic shift in how companies operate and is challenging historically successful network distribution footprints. Traditional logistics networks have long relied on large industrial warehouses, strategically placed using advanced linear programming models to balance service levels in key markets with an optimized total cost to serve. This hub and spoke model still is widely used today.

The takeaway is that industrial real estate property owners should focus their efforts on innovation, such as creating more efficient, accessible and smart spaces, and on securing warehouses close to population hubs. Tenants and consumers alike want technologically advanced warehouse facilities in locations that enable same-day and next-day delivery.

An Inspiring Visual Dialogue at ASCM 2019

Fri, 20 Sep 2019 00:00:00 -0500

I have just returned home after a week in Las Vegas at ASCM 2019. Our staff and volunteers made the event a huge success — I couldn’t be prouder of their dedication and talent.

There were so many highlights this year: The conference kicked off with keynote speaker Fareed Zakaria, CNN Worldwide host, Washington Post columnist and best-selling author, who motivated attendees to take another look at their supply chains in order to thrive within the incredible complexity of Globalization 3.0.

Carey Lohrenz, the first female F-14 Tomcat pilot, shared her lessons learned from a career in the cockpit at Mach 2: “When you are working toward high performance in this rapidly changing environment, you must show up as a fearless leader. You have to show up with courage and operate with tenacity — and know what to do when things go sideways.”

One of my favorite parts of ASCM 2019 was a new offering this year. ASCM engaged a mural artist to talk with attendees, learn about what motivates them as supply chain professionals and then add their visual testimonials to the mural in real time. It gave people from all across the globe a place to interact and be a part of a collaborative dialogue about the power of supply chains to improve lives.

The mural represented people’s thoughts about the value of diverse teams working together to achieve common objectives. It depicted people’s goals for transparent, end-to-end networks; businesses having the capability to care for patients everywhere by getting them critical, life-saving medicines; female supply chain leaders being intentional about serving future women in the field; and always viewing supply chain through a sustainability lens.

The mural captured emotions and demonstrated the essential connections that all supply chain organizations and professionals must strive for each and every day. Seeing these things visually really brought to life the incredible impact of supply chains and undoubtedly inspired ASCM 2019 attendees to return to their organizations with even more dedication to harness the power of supply chains to create a better world.

I look forward to creating another mural at ASCM 2020 in New Orleans. I hope you will save the date, September 13-15, so you can add your voice and share your unique perspectives with your fellow supply chain professionals from around the world.

The Price, and Value, of Keeping It Local

Fri, 13 Sep 2019 00:00:00 -0500

The American textile industry is the largest in the world. Yet remarkably few pieces of clothing actually carry a Made in the USA label. This circumstance can be traced back to the 1970s, when large textile mills emerged in Asia and Latin America. They offered inexpensive labor and materials, plus the ability to produce large orders very quickly.

By the next decade, retail giants such as Gap Inc. still designed and marketed their clothing but manufactured it in these factories overseas. Such early adopters then began building massive global supply chains that made it possible to assign work to whichever supplier was willing to do it the cheapest. By 2003, Gap Inc. clothing was made in more than 1,200 different factories in 42 countries.

U.S. apparel makers couldn't compete; between 1990 and 2011, about 750,000 American textile manufacturing jobs disappeared.

“In 1980, almost 80% of clothing bought in the U.S. was made in America,” CBS News correspondent John Blackstone said in a recent segment. “Today, it's around 3%.”

Blackstone interviewed American Giant CEO Bayard Winthrop, who says that his primary goal when creating the company was to produce everything, start to finish, in the United States. “I'm a free-trade person,” he told Blackstone. “But I also am a believer in saying, 'Wait a second: You cannot gut a bunch of companies in the U.S. and move [the jobs] to Bangladesh, then import all those goods back again and sell them at the local Dollar Store to all the people who now no longer have jobs.’”

Establishing American Giant’s new business model required both reinstatement and nurturing of many essential supply chain partners, particularly those related to procurement and sourcing efforts. The elaborate process included helping a cotton plantation in North Carolina find workers, setting up a South Carolina mill with essential robotics and automation, and even coaxing a yarn dryer out of retirement.

Although keeping the work entirely in the U.S. warrants a steep price tag — an American Giant hoodie costs $108 — the company is enjoying notable success. Slate magazine even called the garment “the greatest hoodie ever made.”

Winthrop is encouraged by consumers’ willingness to pay a little extra to champion companies that support American business partners. He says he hopes his efforts will inspire others to follow suit.

Procurement and sourcing education at ASCM 2019

Things are humming here at ASCM headquarters as staff members finalize preparations for next week’s ASCM 2019 in Las Vegas. Attendees will gain essential supply chain knowledge at 65-plus educational sessions. Many of these will explore procurement and sourcing: World-Class Procurement will help participants tackle challenges associated with supply chain disruption, evolving social priorities and the emergence of the digital era. A procurement and sourcing panel will feature industry practitioners discussing the major impacts and opportunities of new technologies. And the presenter of Strategic Sourcing: 10 Things I Know to be True will delve into why it’s so critical to focus on stakeholders in order to produce a superior sourcing process.

There’s still time to register and join us. I hope to see you at The Mirage!

Dominating the CSCP

Wed, 11 Sep 2019 00:00:00 -0500

Dear supply chain colleagues:
At the beginning of the year, I decided to pursue the APICS Certified Supply Chain Professional (CSCP) designation. In July, I sat for the exam and passed, which has led to my receiving countless questions about my journey. This article is intended to provide anyone considering earning this certification with all the lessons learned, tips and answers needed to be successful.

Preparation

There are two options for exam preparation: self-study or classroom courses. For me, self-study was the best method of learning and most cost effective. The self-study option includes three books, flashcards, online practice quizzes and exams, and access to the highly regarded APICS Dictionary. The total cost of all the online content and printed materials is $995 for ASCM PLUS members and $1,380 for nonmembers.

Your own preparation method decision warrants more than just comparing prices. Honestly assess your levels of motivation and dedication to push yourself through 1,500 pages. Be wise!

The APICS CSCP Learning System

A connection of mine reached out to me on the ASCM discussion boards, asking if he could sneak through the exam without reading through the aforementioned material. My response: “There's no need to sit for the exam without the APICS Learning System material. You failed.”

Honestly, unless you’re an industry titan, the chance of passing without the Learning System is razor thin.

The best way to utilize this system is to follow it sequentially. Assess yourself before you begin reading through the material by taking the pre-test. If you score above 30%, you’re doing better than I did. A low score should not discourage you, but motivate you!

Now that you know where you stand, read an entire module. Complete the end-of-section progress checks. After you’ve finished a module, return to the quizzes and take all of them. I cannot emphasize enough how important it is to avoid memorizing answers. The exam is strictly based on comparison between terms. Use these quizzes to both understand which answer is correct and comprehend why others are incorrect.

Finally, take the post-test and score above an 80% to earn your congratulatory letter.

Flash cards

Write flash cards by hand or in a word-processing program. Memorizing hundreds of key words may zap the enthusiasm out of us all, but writing them even just once helps with retention. Treat this as another type of homework, and it will pay off at exam time.

How long will it take?

Everyone has different levels of experience and learning ability, but a good rule of thumb is your CSCP journey will be a minimum of three months. I began mine in March and tested in July. Along the way, I highly recommend at least touching the material daily. Putting it off for a week and rushing to catch up puts unnecessary stress on you and hinders your ability to learn.

Exam format

The exam has 150 questions. Of those, 130 are operational and 20 are pre-test (not counted). You will have 3 ½ hours to finish. There will be two answers that fit and two that are clearly incorrect. Do you know what the difference between third- and fourth-party logistics? Can you quickly state the triple bottom line? How does a make-to-stock manufacturing organization respond when demand forecasting predicts increased demand due to economic growth?

The exam will question your knowledge of minor variations between two terms (3PL/4PL), if you clearly understand what makes up a term (TBL), and if you understand how one key word is changed by a variable.

Scoring

Scores range from 200-350:

Fail – 200-299
Pass – 300-350

The questions all carry a hidden weight based on difficulty. The three modules require about a 70% or higher to pass.

Parting tips

Put in the time. Read the books at least once, preferably twice. Write down all of the flashcards. Take the quizzes slowly to gain comprehension. On test day, go slowly and flag questions you simply have no idea how to answer. I flagged a question during my exam and proceeded on. Roughly 30 questions later, something triggered that gave me the answer to the one that had stumped me!

Hope this is helpful to all of you aspiring CSCP designees!

Goodyear Inflates Employee Know-How

Fri, 06 Sep 2019 00:00:00 -0500

The skills gap and ongoing talent shortage continue to be some of the greatest dilemmas facing today’s supply chains. According to the new Manufacturing Institute report “The Aging of the Manufacturing Workforce,” 97 percent of firms express at least some concern about their highly skilled workers retiring or leaving for other opportunities; almost half are “very concerned” about the issue. Next to brain drain, survey respondents worry most about related cost increases, lost productivity and apathetic employees.

“Retirees and many millennial employees regularly walk out the door with their tacit knowledge,” write Jim Clarke and Felix Massot for Industry Week. “The company’s documented explicit knowledge from them often becomes buried within project records, databases and online portals.”

Clarke and Massot are knowledge management specialists at Goodyear. With their teams, they conceived a novel approach to getting essential knowledge into the hands of engineers. Termed Knowledge Sweeps, the methodology is a structured search process that involves the following:

Within an online portal, Goodyear assembles technical literature resources — handbooks, trade publications, an internal expert directory, meeting minutes, benchmarking studies, technical reports and more.
Next, employees conduct systematic queries by studying the relevant databases. This may involve engineering project teams requesting research sweeps during the tire design process or individuals accessing the resources for training and promotion purposes.
Knowledge management specialists then conduct a reference interview while employees observe and share feedback in order to maximize accuracy.
Finally, all sweeps are stored in the portal, thereby continuing to reinforce this key tool for the future.

The authors describe a Knowledge Sweep as an enhanced form of brainstorming and data-gathering, as well as a constructive icebreaker that facilitates valuable conversations about risk and opportunity.

Goodyear’s knowledge-management initiatives have unveiled patent data and long-lost technical reports, preventing unnecessary new studies and redundant designs. One Knowledge Sweep even averted a total plant shutdown by revealing proper extruder cooling water specifications to correct an unforeseen problem.

Since 2010, the sweeps have led to a 50% drop in product development cycle time. Last year, they delivered more than $7 million in cost savings.

Long-lasting wisdom

Optimize your own knowledge-management abilities with an ASCM 2019 Preview Pass — a unique way to experience conference educational content, exhibits and networking opportunities on a smaller scale. Preview Pass attendees enjoy two days of access to the Expo Hall and an invitation to the Welcome Reception.

They are also encouraged to take advantage of specially curated Spotlight Sessions. These fast-paced, 25-minute presentations take place in theaters located right on the Expo Hall floor. Spotlight Sessions feature engaging speakers and a wide range of topics, such as leveraging data, industry trends and innovations, employee training, risk management, and more.

All of this is available for a limited time at just $79 with discount code LVPPSAVE20. Register today, and I look forward to sharing knowledge with you at ASCM 2019, September 16-18, in Las Vegas.

Reconsidering the Purpose of Business

Fri, 30 Aug 2019 00:00:00 -0500

In 1776, Scottish economist Adam Smith asserted that the essential function of a business was to generate profit and increase shareholder wealth. Also known as the Father of Capitalism, Smith identified profitability as a corporation’s defining quality.

Two centuries later, Father of Modern Management Peter Drucker contended, “There is only one valid definition of business purpose: to create a customer.”

These two fathers might be surprised to see what their successors have to say on the issue today. Nearly 200 CEOs, representing every sector of the economy, recently conceived a significant philosophical shift in a corporation’s purpose. These members of the Business Roundtable (BRT) believe companies should uphold a fundamental commitment to all stakeholders by

delivering value to customers and meeting or exceeding their expectations
giving employees fair compensation, benefits, training and education, as well as fostering diversity and inclusion
dealing ethically with suppliers and working only with businesses that align with the company mission
supporting local communities and protecting the environment through sustainable practices
generating long-term value for shareholders, continuing to innovate and maintaining transparency.

David Gelles and David Yaffe-Bellany write in The New York Times that reconsidering the role of business in society has a lot do to with an “increasingly skeptical public.” Corporations today face rising dissatisfaction over the minimum wage and income inequality in general, climate change, harmful and life-threatening side effects of dangerous products, and poor working conditions. Also, in this incredibly tight labor market, more and more young professionals are insisting that employers do more than provide a decent salary.

“As consumers and employees hold companies to higher ethical standards, big brands increasingly have to defend their positions on worker pay, guns, immigration, President Trump and more,” the authors note, adding that Wall Street will need to embrace the BRT’s idealism for these leaders to keep their promises: “Until investors start measuring companies by their social impact instead of their quarterly returns, systemic change may prove elusive.”

The BRT includes CEOs from Amazon, Apple, General Motors, Pepsi, Target, UPS and Walmart. These leaders did not provide specifics on how they will reach the new ideals they presented — and some news outlets are calling them out for the omission — but several BRT members did say the group will soon explain how they plan to realize these goals.

Just five minutes

Here at ASCM, we are also raising the bar in order to help supply chains across the globe support ethical standards, ensure suppliers align with company values, demonstrate transparency and achieve competitive success. With the ASCM Enterprise Certification, we offer supply chain organizations a concrete, demonstrated way to blaze a trail through the new world of responsible business.

Get started today with the Enterprise Certification Self-Assessment, a simple five-minute questionnaire that enables you to evaluate your supply chain maturity in comparison with the three program pillars of economic, ecological, and ethical supply chain. It is possible to achieve the BRT’s worthy aims. The first step is supply chain excellence.

Hong Kong Airport Protests Shock Supply Chains

Fri, 23 Aug 2019 00:00:00 -0500

Last year, 5.1 million metric tons of air cargo passed through Hong Kong, making it the world’s busiest hub for air cargo traffic. When protests disrupt such an active facility, it’s no wonder that supply chains around the world are unnerved.

According to Bloomberg, Hong Kong’s standing as a safe and reliable commercial hub may face irreparable damage. Authors Enda Curran, Jeanny Yu and Alfred Liu call this “a potential death blow for an economy that has leveraged its business-friendly reputation to become the primary gateway between China and the rest of the world.”

Experts estimate that the airport protest could end up costing $1.4 billion in air cargo. A small amount of emergency materials were affected. In addition, several semiconductor original equipment manufacturers (OEMs) reported that their logistics were interrupted. Many companies handled urgent orders by transferring flights to Shenzhen or Shanghai.

While normal operations continue at the airport for now, circumstances surrounding the unrest in Hong Kong are ambiguous. The discontent involves the proposed extradition bill known as Fugitive Offenders and Mutual Legal Assistance in Criminal Matters Legislation. In addition to concerns surrounding the extradition, protesters believe the bill will weaken Hong Kong’s already tenuous autonomy from China.

“If the violence in Hong Kong becomes the norm, it will force mainland electronic component agents to gradually detach their dependence on Hong Kong and turn import and export trade to Shenzhen, Shanghai and other mainland bonded warehouses,” writes Fendy Wang for EE Times. “Once this happens, semiconductor OEMs and large agents need to make major adjustments to their business, and small and medium-sized distributors with import customs declarations will also be hit hard.”

Another fear for many in the city is that China may eventually use force to restore order. “Such a move would undermine the ‘one country, two systems’ principle that has underpinned Hong Kong’s success since 1997 and potentially lead to a crippling withdrawal of special trading privileges by the U.S.,” the Bloomberg article states. “Even if Hong Kong avoids worst-case scenarios, the city’s appeal may already be waning in the eyes of many international companies and investors.”

Essential preparation

Logistics, transportation and distribution professionals know better than most that disruption is a constant these days. The APICS Certified in Logistics, Transportation and Distribution (CLTD) designation is the premier certification for professionals who want to demonstrate mastery of these topics and get ahead of the curve. The CLTD journey exposes you to in-depth education on a broad range of topics, including global logistics, network design, transportation, sustainability and much more.

Take this important step to invest in yourself. APICS certifications and the body of knowledge have been the global standard in professional development for 60 years. They are recognized and sought after by companies around the world — in fact, CLTD designees on average earn 27% more than their counterparts without an APICS certification.

Your logistics expertise is more valuable now than ever before. See what CLTD can do for your career and organization.

Online Stores Confront Soaring Return Rates from German Consumers

Fri, 16 Aug 2019 00:00:00 -0500

German shoppers send back 12% of their online purchases, creating huge economic and logistical issues for e-commerce retailers and compelling these businesses to reexamine their return policies. According to a new study by the University of Bamberg, German consumers sent back 5.5 billion euros worth of products last year — more than anywhere else in Europe. The Netherlands followed close behind, trailed by France, Spain, Italy, the United Kingdom, Belgium, and Poland.

Stefan Nicola writes for Bloomberg that e-commerce companies including Amazon and Zalando are looking for ways to help consumers purchase the right product and that there are no surprises when the package is opened: “Online fashion retailer Zalando is trying to cut down on returns … by posting videos of models wearing the apparel and using machine learning technology to match shoppers with the right sizes. Mr. Spex, a German spectacle retailer backed by Goldman Sachs Group Inc., lets customers virtually try on glasses, placing frames over clients’ headshots as they browse its website. And Amazon has introduced augmented reality tools so that shoppers can see how a piece of furniture looks in their home before they decide to click the ‘buy now’ button.”

To save money and reduce waste, Amazon also says it may increase charges for German shops that don’t streamline packaging. Likewise, Zalando is employing robotics in the hopes of optimizing warehousing processes in order to make them less expensive.

Many companies are providing added information about their products — especially clothing and shoes — through online chats, more detailed descriptions, 360-degree photos and videos. A few companies have begun giving customers discounts in return for honest feedback.

Lars Hofacker, an analyst at EHI Retail Institute in Cologne, is quoted in the article. He says retailers should find ways to entice shoppers to return items in stores because it gives the retailer an opportunity to talk to people in person, thus improving retention.

Master returns in Las Vegas

The Return learning path at ASCM 2019, September 16-18 in Las Vegas, features numerous educational sessions that address the growth of omnichannel commerce and the complexity of global networks. Speakers will offer real-world strategies to help supply chain organizations of all kinds perfect the reverse-logistics process, enhance customer relationships and maximize return on investment.

E-Commerce Hangover, presented by Tony Sciarrotta, executive director of the Reverse Logistics Association, will explore the growing volume of omnichannel returns, related logistics and customer service issues, and the effects of e-commerce and the internet of things on supply chain.

Heather Howard, vice president at Rothy’s, will be joined by Birdie Bartholomew and David Sobie of omnichannel retail solution provider Happy Returns. They will share proven methods for creating a world-class brand experience via fast, easy and cost-effective returns. Participants will discover how leading retailers are streamlining operations and using vertically integrated solutions to redefine reverse logistics.

How Ingersoll Rand Revives Exhausted Products

Fri, 09 Aug 2019 00:00:00 -0500

Industrial manufacturer Ingersoll Rand (IR) has long positioned itself as a company that prioritizes efficiency, energy savings and productivity. As its website states, “With principled leadership and ethical business practices, our high-engagement culture delivers enduring results that lead to a sustainable world.” Recently, IR saw potential to create added value by helping its customers meet their own environmental challenges. As a result, company leaders are taking the conservation philosophy to a new level.

IR’s sustainability commitment includes the extremely ambitious goal of reducing not its own, but its customers’ carbon emissions by 1 gigaton by 2030. Greenbiz’s Heather Clancy reports that this is equivalent to the annual emissions produced by Italy, France and the United Kingdom combined. Much of the plan revolves around remanufacturing end-of-life equipment.

“[IR] has operated an aftermarket service organization in Charlotte, North Carolina, since 1974,” Clancy writes. “After all, many metals used to make its Trane heating, ventilation and air-conditioning equipment have a demonstrable value, and there are well-established processes for recovering it. But in more recent years, the 183,000-square-foot operation … has become involved with activities focused on a different sort of mission: keeping older equipment in the field for as long as possible.”

Scott Tew, executive director for IR’s Center of Energy Efficiency and Sustainability, told Greenbiz that the company is focused on the concept of a “customer for life.” He recounts the story of a historic hotel in Portland, Oregon, that needed to upgrade its Trane HVAC system but had limited access to remove and replace failing equipment. Engineers disassembled and transported components back to Charlotte for repair, then reinstalled them in the exact same footprint as the original system. IR expects them to continue functioning for decades.

IR says it will fully support this environmental strategy moving forward. In fact, the company has established a new-product-development requirement that directs engineers to design for sustainability. As Clancy writes, “That includes both efficiency considerations and materials choices.”

Far-reaching results

For years, IR has looked to the APICS body of knowledge as a source of best practices, the primary method for getting employees speaking the same language and a key method for working toward a unified supply chain strategy. In fact, the company adopted a policy that required all materials managers to become APICS Certified in Production and Inventory Management (CPIM) designees within 18 months of being hired.

Then, to sustain this investment in learning and development, IR rewrote its materials management job descriptions to require CPIMs for all incoming managers. In addition, staffing personnel began targeting CPIM designees for open positions.

Today, IR has hundreds of CPIMs — and the finance team reports that this investment has paid off. A recent analysis found a direct correlation between materials manager performance and APICS certification. Most importantly, we’re now seeing that this training has led to initiatives that clearly aim to create a better world through supply chain. Learn more about what this globally recognized standard can do for your organization, your suppliers, your customers and beyond.

New Brexit Deadline, New Supply Chain Difficulties

Fri, 02 Aug 2019 00:00:00 -0500

The United Kingdom had been scheduled to leave the European Union on March 29, 2019 — two years after it began the exit process. However, at this point, the withdrawal agreement has been rejected three times by UK members of parliament. The resulting six-month extension means Britain will now withdraw on October 31, 2019 — likely without a deal to ease its departure.

“A no-deal Brexit is back on the agenda,” write Denise Roland and Saabira Chaudhuri in The Wall Street Journal. “That would hinder Britain’s trading relationship with the bloc, leading to a reintroduction of steep tariffs and new border checks.”

In fact, there are numerous challenges and complications associated with the latest schedule. First, warehouse space is nowhere to be found “because there isn’t any,” Peter Ward, head of the UK Warehousing Association, told The Journal. Numerous businesses have been stockpiling goods to guard against potential disruption at the border. Add to this the demands of the holiday season (about 20% of UK retail sales happen in November and December), and the consequences for retailers are dire.

Secondly, as October is the start of flu season, vaccine makers are struggling. Unlike many other drugs, flu vaccines cannot be stockpiled. Hugo Fry, managing director of Sanofi SA, the world’s largest maker of flu vaccines, is quoted in the story. He says his company has “stepped up” its provision of air transport and has been testing several alternative delivery routes and methods to guard against potential delays. Still, it’s unlikely these efforts will be enough.

The food industry is also affected by the October timing. In the fall, Britain shifts toward a greater reliance on imports. As a result, there will likely be significant fruit and vegetable shortages.

Finally, many businesses have already put contingency plans into action, and these cannot be repeated. “For instance, some car makers, which rely on just-in-time delivery of parts made in Europe, scheduled factory shutdowns for April to avoid disruption,” Roland and Chadhuri write. “But idling plants again in November isn’t an option.”

Be a supply chain problem solver

Supply chains around the world have been contending with the effects of Brexit since the original vote. Strategies have been set, and assets have been moved around for months now, but setbacks and glitches keep surfacing. And this isn’t necessarily a temporary problem; Brexit will have ripple effects for years.

If your organization is coping with the complexities of Brexit — or a supply chain disruption of any kind — ASCM offers a variety of APICS certifications to help you navigate the waters. For 60 years now, individuals and organizations have turned to APICS credentials to build skills and advance supply chain performance. The Certified in Production and Inventory Management (CPIM) designation is recognized globally as the standard of professional competence. APICS’s Certified in Logistics, Transportation and Distribution (CLTD) program will enable you to demonstrate in-depth knowledge of a broad range of logistics topics. And becoming a Certified Supply Chain Professional (CSCP) validates your supply chain expertise and ability to optimize operations in the most stressful, high-demand environments.

Learn more about how these industry standards can elevate your career and organization.

The 5 Principles of Customer Experience Leadership

Tue, 30 Jul 2019 00:00:00 -0500

Customer experience is one of the hottest business topics today. It has come to the forefront in nearly every industry as companies seek to both enhance how they deliver their offerings in a way that is unique to customer needs, fulfilling, immediate, low effort and personalized and create a service people would recommend and purchase again. Customer experience also is a key strategy for companies to differentiate their products and services from close competitors. Increasingly, company leaders have come to discover that creating a customer-centric business, combined with superior products and services, is the way to succeed.

There are five P’s to effective customer experience leadership: passion, persuasion, pilot, performance and paradigm. The five P’s work for all types of businesses, products and services.

Passion: Passion is a never-ending quest to discover new insights into what customers want, create better experiences around what they truly value and enable new offerings that move them from sporadic customers to loyal patrons. Customer experience passion must be part of company culture, meaning that employees should never be satisfied with what they are doing for customers today. Instead, employees should constantly be exploring, testing and evaluating what more they can do.

Persuasion: Too often, customer experience initiatives spark fear, concern and worry within employees because they are simply told about initiatives, rather than convinced of their abilities to make things better for customers. Employee empowerment toward a greater focus on a consistent, meaningful and powerful customer experience is best done with people who are persuaded to facilitate the new initiatives. Persuasion is a leadership principle that is humble, respectful and enabling.

Pilot: A pilot uses data collection, predefined success criteria, a standard implementation and multiple iterations to fully test out a new idea on a small scale. If successful, then a larger pilot should be performed before full implementation occurs.

Performance: Companies should keep a central focus on performing better in key customer areas. In fact, a performance focus is critical to gain customer, employee and senior leadership engagement and support. Customer experience analysis and strategy are requirements, but they need to focus on performed actions that make customer journeys easier, faster, less error-prone and more consistent.

Paradigm: Paradigm shifts are changes to established methods. This often is the most difficult P for employees and customers to achieve. However, paradigm shifts offer the greatest potential benefits as well. The first four P’s build a foundation of trust, tests, improvements and proof. Then, paradigm shifts, taken with employee support and customer testing, can be amazing.

A Shiny New Way to Secure Global Supply Chains

Fri, 26 Jul 2019 00:00:00 -0500

As 3D printing continues to transform the way things are made, supply chain professionals are facing a new wave of threats. The infinite number of computer-aided designs available online today significantly increases the likelihood of purchasing counterfeit components. These parts rarely meet required performance standards and make it alarmingly easy for hackers to inject malicious software in high-tech devices. In fact, Gartner says 3D printing can be blamed for the loss of $100 billion of intellectual property per year globally.

“Reliably tracking physical objects is becoming increasingly important to the world economy,” writes David Z. Morris for Fortune. But a new startup, Dust Identity, has a “strikingly innovative, yet straightforward” solution to this problem.

Dust Identity’s process begins with tiny diamond fragments embedded in a polymer, which can be sprayed on a part. Once dry, the fragments are frozen in place and a unique tracking code is created. The resulting pattern of scattered light is as random and complex as a human fingerprint.

“[The] tagging technology could eventually help secure the increasingly long and complex supply chains that global manufacturers rely on … essentially turning the solution into a distributed database that could allow for more reliable data-sharing among the thousands of producers and shippers,” Morris explains, adding that manufacturers of complex products, such as airplanes and electronics, are most likely to benefit from the technology.

Interestingly, the application of diamond fragments in a polymer is inexpensive. Dust Identity uses synthetic diamonds recycled from the abrasive industry. The company believes that, at scale, a single application of its tag could cost as little as one one-thousandth of a cent. The scanning technology involved — a simple microscope lens and camera — is also low-cost.

Risk management education

The world of supply chain is complex and ever-changing. Industry professionals must constantly evaluate their organization’s potential vulnerabilities and keep supply chain risk management top of mind. At ASCM 2019, numerous educational offerings provide real-world strategies for accomplishing these goals.

First, Anthony Scriffignano, senior vice president and chief data scientist at Dun & Bradstreet, will present The Convergence of Digital Disruption. This session will examine how to effectively inform your decision-making with digital technologies that use data in exciting new ways.

The panel discussion Procurement, Sourcing and Trends to Watch in 2020 and Beyond will feature supply chain practitioners discussing the major impacts they are seeing in sourcing, proven best practices for minimizing risk, and specific methods for taking advantage of new tools and platforms.

In addition, the ASCM 2019 World Café will enable attendees to explore numerous facets of supply chain risk and resilience. At the interactive discussion, attendees will collaboratively brainstorm ways to identify potential threats and recover from supply chain disruptions.

All three sessions count as one elective credit hour toward the ASCM Risk Management Education Certificate. Join us for ASCM 2019, September 16-18, in Las Vegas to take advantage of these important supply chain risk management offerings. Register by July 31 to save $400.

Parcel Lockers Ease Urban Gridlock

Mon, 22 Jul 2019 00:00:00 -0500

Whether you’re on the sending or receiving end of a package, it’s understandable to be worried about the price tag of urban last-mile delivery, which is estimated to gobble more than half the total cost of shipping goods. To mitigate that hit to the bottom line, it’s important to think strategically about how your supply chain interacts with the city grid — and the inevitable traffic that snarls it. Clearly, you don’t dictate how these things function; but you do have some control over how effectively you navigate them.

Recently, we have been studying parcel lockers at the Urban Freight Lab at the University of Washington Supply Chain Transportation and Logistics Center. The lockers are a logical extension of moves you’ve likely already made around consolidation and delivery density in the parts of the supply chain wholly (or mostly) under your control. In a warehouse or on a factory floor, smart design minimizes the amount of movement — and, therefore, time — needed to get the job done. The same principle holds true for last-mile urban goods delivery.

In a congested city, delivering door-to-door at multiple addresses (and floor-to-floor inside urban towers) requires a lot more moving around than delivering to a single parcel locker serving multiple recipients. Parcel lockers may help mitigate the last-mile double whammy of hefty failed first delivery rates and truck dwell times. For package receivers, these issues make you wait longer to get what you need. For carriers, their costs are a clear detriment to the balance sheet.

Our recent parcel locker pilot test, sponsored by Parcel Pending, in an urban tower in downtown Seattle demonstrates proof of concept. We found that a locker delivery reduces total delivery time in the tower by 78 percent when compared to traditional delivery. And there were zero failed deliveries to the locker. Of course, lockers won’t always slash delivery speeds by 78 percent: Our pilot captured a best-case scenario when the driver had a single package to deliver and then returned directly to the loading bay after delivery. But strategically sited lockers have the potential to offer substantial time-savings. Logically speaking, how could they not?

It’s also telling that our pilot was a joint project with businesses including Kroger, Ford Motor Company and Nordstrom. Along with carriers such as UPS and the U.S. Postal Service, these members of the Urban Freight Lab understand the bottom-line imperative to engage with cities to solve problems by investigating l high-impact, low-cost solutions for businesses delivering goods in urban settings and cities trying to manage limited curb and parking space.

Case in point: Look no further than the explosion in Amazon-branded lockers in 7-Eleven convenience stores, Whole Foods Markets, universities, offices and residential buildings in cities nationwide. (The company has also launched Hub, which accepts packages from anyone.) Clearly, lockers show potential for cost savings, with analysts predicting the retail behemoth will move even more toward lockers and hubs to help slash skyrocketing shipping costs.

Given the employee time lost in sorting packages and contacting staff when goods arrive, businesses are also hungry for solutions to more efficiently manage incoming deliveries. Even multinational corporations with highly complex supply chains that typically rely on truckload transport can receive shocking numbers of one-off packages in the form of pricey expedited shipping — items that could be managed via locker.

Lockers may not make sense for every company and don’t work in all scenarios. But in many cases, they improve the status quo, and anything that creates options can help. Companies could also consider density drivers such as pop-up pick-up points (a low-tech option) or trucks that serve as roving lockers (a more high-tech vision).

Bottom line: To make supply chains as effective as possible, professionals must think creatively about urban goods delivery and navigating the urban grid. Without innovative approaches, traffic congestion in cities will only become costlier to business. Those that contemplate innovations such as lockers now are more likely to survive and thrive.

Amazon Invests in Potential

Fri, 19 Jul 2019 00:00:00 -0500

There is a long tradition of businesses inventing holidays. While Black Friday arose more-or-less organically, Cyber Monday was the brainchild of the National Retail Federation, according to The New York Times. Small Business Saturday was conceived by American Express to be Black Friday’s locally focused counterpart. And now we have Prime Day — Amazon’s annual global shopping extravaganza. Exclusive to Prime members, the sales event features lightning deals that last only until items sell out.

Prime Day this past week actually lasted 48 hours, July 15 and 16, and was the biggest in Amazon’s history. There is little doubt that the online shopping trend will continue to escalate. As it does, the technology behind it is reshaping roles and leaving companies without enough skilled personnel. To address this challenge, Amazon has announced a plan to retrain 100,000 employees — one-third of its U.S. workforce.

Chip Cutter writes for The Wall Street Journal: “Companies are increasingly paying up to retrain workers as new technologies transform the workplace and companies struggle to recruit talent in one of the hottest job markets in decades. Amazon.com Inc. is the latest example of a large employer committing to help its workers gain new skills.”

The initiative will cost Amazon $700 million over a six-year period. It involves everything from a Machine Learning University to aircraft mechanics courses and even nursing programs. Employees who volunteer to participate could either move into more-advanced jobs inside Amazon or find new careers elsewhere.

“Though Amazon’s training won’t carry a stipulation that employees remain with the company, experts say the program is likely to help retain staff,” Cutter writes. “The ability to hold on to talent is important because recruiting new workers and training them is expensive and time-consuming.”

Never stop learning

The latest issue of SCM Now magazine highlights the value and importance of investing in employees. For the cover story, Editor-in-Chief Elizabeth Rennie interviewed eight outstanding female chief supply chain officer (CSCOs). Each of them shares key insights into how to inspire and engage employees.

Kathy Wengel, chief global supply chain officer at Johnson & Johnson, told Rennie: “Technology is quickly evolving and changing the way we do business. As leaders, we must continue to upskill and transform our ways of working, so people can grow in their careers as technology evolves.”

Sandra MacQuillan, CSCO at Kimberly-Clark, noted, “None of us can move forward alone — it requires tapping into the skills and capabilities of many people along the way and rallying them behind a shared vision.”

And Susanna Zhu, CSCO at The Hershey Company, offers the following advice: “Great leaders are passionate about people, genuinely care for the team and can energize the organization to deliver the vision. They care about team success while caring for people. Lastly, great leaders are curious and are students for life.”

Quell your own curiosity and see what you can learn inside the brand-new issue of SCM Now.

RDCs and Mathematical Optimization Transform a Global Health Supply Chain

Wed, 17 Jul 2019 00:00:00 -0500

In supply chain, companies often leverage a regional distribution center (RDC) model to balance performance and cost. For the global health supply chain operated by Chemonics International and a consortium of partners, including IBM, RDCs play a critical role in perpetuating a healthy and robust network. They serve as a demand and supply buffer to meet variation more effectively with limited manufacturing capability, support the pre-positioning of products closer to customers for faster responses, provide an economy of scale to meet storage needs, enable logistics consolidation and serve as holding points for more efficient logistics operations, and provide better access to logistic resources.

When Chemonics and our partners began implementing the USAID Global Health Supply Chain Program - Procurement and Supply Management (GHSC-PSM) in 2015, the health of millions of patients was put in our hands. We were tasked with procuring and delivering an uninterrupted supply of lifesaving health commodities to nearly 60 countries around the world. Along with this responsibility came the opportunity to optimize the GHSC-PSM global supply chain network.

From the very beginning, our clients recognized the opportunities for efficiency gains and cost reductions with a consolidated global supply chain network that included a streamlined RDC strategy. In 2016, while working closely with USAID in a rigorous network design optimization effort, we proposed a new RDC network in Belgium, the United Arab Emirates and South Africa, with anticipated annual warehousing and logistics cost savings of $38 million over six years.

We followed a five-step process to implement the new RDC strategy:

Product selection: Although RDCs provide many benefits, they are not suitable for all products. Some countries have stringent shelf-life requirements, at a 75-80% range when delivered. For those goods with a two-year shelf life, this translates to a maximum of two to three months of storage dwell. We analyzed historical data to identify high-demand, high-value products for the RDCs, as well as those with long production lead times. These goods include those that were previously delivered through RDCs, and some new ones, to assess the viability of the RDC network.
Demand modeling: Unlike orders in many commercial settings, the orders we process for GHSC-PSM have lead times ranging from a few months to more than a year prior to the requested delivery date. This affects the transportation mode decision and whether the order should be fulfilled through an RDC or direct drop. Therefore, when we conducted demand modeling, we used clustering analysis on the historical order lead times by country and product to derive more accurate demand profiles over time. We also leveraged research and insights from the public health community to model future demand growth factors or disease burdens, which inform demand scenarios for our analyses.
Location candidate screening: We started with a greenfield approach, considering all countries as possible candidates, and asked ourselves where the future RDCs could be. Leveraging historical supply and demand data, we developed a gravity model to come up with locations that could work well as consolidation points. We then analyzed various factors, such as infrastructure availability, access to transportation, stabilities and risk, and settled on a list of 12 countries.
Transportation and warehouse cost modeling: After the short-listed locations were identified, we used a combination of market intelligence and information collected through warehouse and transportation requests for quote to more accurately model transportation and warehouse costs.
Mathematical modeling and scenario analysis: The last, and most involved, step required building a mixed-integer network design optimization model that, for each given demand scenario, optimized the decisions of where to set up RDCs, which products should be stored in each RDC, how to fulfill demand (through RDC or direct drop), and which modes of transportation would work best. Manufacturing lead time, transportation lead time and shelf-life requirements were used to assess the likelihood of on-time delivery. The model minimizes warehouse and transportation costs after meeting a set performance target. Based on the large number of scenarios, we identified robust network design options and worked with USAID to factor in non-quantitative factors to come up with the final design recommendation.

GHSC-PSM’s RDC network became operational in April 2018. Based on the data collected to date, it is achieving close to 90 percent on-time delivery performance for the RDC-fulfilled orders and has realized $2.9 million in warehouse and freight cost savings in the first six months of operation. Once the new warehouse in South Africa is active later this year, GHSC-PSM projects an $8 million annual logistics savings, assuming similar levels of activity.

Read more about the Chemonics and IBM global health supply chain initiative in “Operating a Global Health Supply Chain in Low-Resource Settings.”

Africa Unlocks New Trade Potential

Fri, 12 Jul 2019 00:00:00 -0500

At the start of this week, African leaders launched a continental free-trade zone that, if successful, could be an economic game-changer. The African Continental Free Trade Area (AfCFTA) is expected to unite the continent’s approximately 1.3 billion people, create a $3.4 trillion economic bloc and begin a new era of economic development, Reuters reports.

Africa has historically lagged behind other continents in terms of domestic economic activity. In 2017, its intra-regional trade accounted for just 17% of exports, compared with 59% in Asia and 69% in Europe. In addition, Africa has missed the economic advantages other trade blocs have experienced in recent decades.

AfCFTA, the largest free-trade agreement since the establishment of the World Trade Organization in 1994, is set to change all of that for the better. Members of the trade bloc have committed to eliminate tariffs on most items, which should increase regional trade by 15-25% in the medium term. IMF estimates that AfCFTA could boost trade by as much as 50% if challenges such as poor infrastructure, large areas of unrest, corruption and border bureaucracy are solved.

The continent also has to grapple with conflicting interests. Countries such as Nigeria, which relies heavily on its oil exports, likely will not receive the economic advantages other nations will. Nigerian officials have expressed concern that the country will be flooded with low-priced goods, which would stifle efforts to expand its manufacturing and farming industries. By comparison, South Africa, which boasts the most developed manufacturers in Africa, would benefit from easily reaching new customers in other parts of the continent.

Lastly, there’s the issue of economic disparity. Nigeria, South Africa and Egypt together make up more than half of Africa’s gross domestic product, while Africa’s six sovereign island nations represent about 1 percent combined. “It will be important to address those disparities to ensure that special and differential treatments for the least developed countries are adopted and successfully implemented,” Landry Signe, a fellow at the Brookings Institution’s Africa Growth Initiative, told Reuters.

A need for leaders

The creation of a continental free-trade agreement certainly is a step in the right direction for Africa. Still, the developing economy will have issues to sort out and lessons to learn before it can reach the level of prosperity experienced in other continents. This is where supply chain management knowledge will make the difference. The continent and its nations will need professionals who can understand the new trade situation, forecast demand, ensure supply, manage production, optimize transportation and more.

ASCM is nurturing supply chain leadership in Africa. Earlier this year, we hosted the first of our ASCM Leadership Forums. These one-day seminars develop supply chain leaders on the continent, help them solve supply chain challenges, build community, and disseminate ideas and best practices. A second round of forums will take place in October. I urge you to learn more about how these events are establishing and nurturing a sustainable supply chain association in critical African markets.

Will the Tariff War Extinguish Future July 4 Festivities?

Tue, 02 Jul 2019 00:00:00 -0500

My home of Illinois is one of the few states in the nation that has banned consumer fireworks, allowing the sale of only sparklers and other novelties. So, on my way to visit family for the July 4 holiday, it was no surprise as I crossed the border into Kentucky to see fireworks stands displaying Roman candles, fountains, jumping jacks and countless other pyrotechnics.

One such retailer was Ohio-based Phantom Fireworks, one of the largest sellers in the nation, with more than 1,500 venues in 17 states. Phantom Vice President William Weimer recently supplied testimony to U.S. Trade Representative Ambassador Robert Lighthizer regarding the potential impacts of the tariff war if renewed negotiations don't prove effective in the long run.

“The proposed tariff would produce a crisis for the American fireworks industry,” he wrote. “Fireworks are the quintessential celebration of Independence Day in the U.S., dating back to the founding of the country when then future U.S. President John Adams predicted in a now famous July 3, 1776, letter to his wife Abigail, that Independence Day ‘ought to be solemnized with pomp and parade, bonfires and illuminations from one end of this continent to the other, from this day forward forevermore.’ Adams’s vision lives on today.”

Weimer went on to contend that the proposed tariffs would cause immediate industry layoffs and mean significantly less seasonal work for students, teachers and others who rely on the income. He added that the tariffs would have a negative impact on American importers, distributors and retailers; these companies would not be able to absorb the up to 25% increase in import costs; and that it is “entirely and utterly impossible” to find alternative sources for Chinese-produced fireworks.

According to the U.S. International Trade Commission, China and Hong Kong supplied 97.75% of all consumer fireworks imported into America in 2018. The remaining 2.25% was split between Barbados, Germany, Israel, Japan, Mexico, Spain, Thailand and the United Kingdom.

The Washington Post’s Taylor Telford recently wrote that fireworks are being “brought into the fray” of the trade war. She continued: “And while Trump has repeatedly suggested that companies can sidestep the tariffs by moving manufacturing to the United States, that is not an option for domestic fireworks sellers. It would take years to replicate the manufacturing base in another country, and fireworks executives are extremely wary about major changes that could upend safety protocols.”

Illuminating supply chain knowledge

This holiday weekend, if you have a few minutes in between barbecues and the ballpark, check out ASCM’s Supply Chain Learning Center. This centralized, professional development hub has numerous educational offerings on supply chain risk management. Two current webinars explore strategies for effective threatcasting and coping with constant change in global supply chains. To delve into these topics even more deeply, you can also register for an upcoming threatcasting or risk management seminar.

Finally, happy Independence Day from all of us at ASCM. As John Adams urged, we hope you are enjoying the “pomp and parade, bonfires and illuminations.”

5 Strategies for Expanding Your Supply Chain Skill Set

Wed, 26 Jun 2019 00:00:00 -0500

Industry experts estimate that 270,000 new supply chain management positions are created each year. Furthermore, for every six job openings, there is only one qualified worker available to fill them. To address this ongoing talent gap and prepare to lead the supply chains of the future, industry professionals must hone their skills and continuously develop new capabilities.

“The supply chain landscape is not the same as it was a decade ago,” writes Roy Strik for Logistics Middle East. “New advancements in technology such as 3D printing, autonomous vehicles, the internet of things, big data analytics and omnichannel retailing have brought about tremendous change.”

Likewise, in a recent Forbes article, author Anant Agarwal says technology is revolutionizing modern work. As a result, professional success will hinge on having a mix of skills. “The power to learn lies in the hands of individuals to take control of their careers,” he writes.

To prepare for these extraordinary shifts, Strik and Agarwal offer some tips:

First, conduct an audit of your skillset. Identify areas of strength and weakness, and always be thinking about how you can better position yourself professionally.
Next, hone your technological expertise. Information systems are at the heart of most business processes. You’ll make better decisions when you understand how they work. Similarly, learn all you can about the latest innovations — artificial intelligence, robotics and the like — in order to apply them effectively. In addition, look to advanced analytics to help you maximize the data sets created by your networks.
Gain risk-management expertise. Strik writes: "As new and improved products, processes and services are entering the market, risk management is fast becoming an important asset for supply chain managers. … The knowledge of risk management can help supply chain managers ask the right questions, quantify risks and build contingencies."
Develop a holistic leadership style. The ability to control a global supply chain from a single point of command will empower you to drive positive change.
Finally, be a lifelong learner. “Education no longer stops after high school or college,” Agarwal says. “Learning will be a fluid and continuous process.”

Ongoing advancement

As technology transforms our supply chains, how can we blend the latest innovations with our understanding of fundamental supply chain activities in order to achieve strategic, next-generation networks? ASCM is dedicated to helping you answer this question with APICS certifications and credentials. The APICS body of knowledge has been the global standard in learning and development for more than 60 years. Yet, we know that keeping pace with change is critical. Therefore, I am pleased to share the news of a patent-pending tool we have developed called Rapid Item Development (RapID™).

RapID will enable ASCM to create high-quality test questions more quickly, add questions on several important topics, enhance security and expand testing windows. Download the RapID whitepaper to read more about how this strategic approach will ensure that APICS education continues to be as relevant as possible. By clearly reflecting future supply chain management job requirements, we at ASCM look forward to supporting you and your organization for years to come.

5G Will Bring Exciting Advancements to Manufacturing

Mon, 24 Jun 2019 00:00:00 -0500

While the potential of 5G to disrupt a wide variety of industries is obvious, manufacturing is primed to benefit the most from these connectivity advancements. Business 4.0 is upon us, and it will bring emerging technologies and innovations that will transform the ways manufacturers operate. 5G will be the fuel for this transformation.

The potential manufacturing opportunities are limitless. For example, 5G offers an immense capability for the automotive segment to reimagine connected vehicle offerings and expedite autonomous vehicle development and shared mobility transformational journeys.

5G also provides a means to build smart factories as well as connected products and services that offer better user experiences by leveraging emerging technologies such as artificial intelligence (AI), augmented reality (AR), virtual reality (VR) and advanced analytics. In addition, the enhanced connectivity offers a means to cut costs and minimize downtime throughout the entire value chain.

Manufacturers can benefit from 5G’s increased data transfer speeds and minimized latency for communication between predictive analytics technologies and shop-floor machinery. That improvement will be present along all aspects of the supply chain and make it possible for companies to prepare for the inevitable maintenance needs of shop-floor machinery.

Additionally, 5G will improve edge-computing capabilities, helping manufacturers optimize their after-sales services and inventory management efforts. Devices will be able to interact with one another over the 5G network in order to automatically schedule, manufacture and deliver aftermarket parts and services without requiring the end-user to withstand long lead times. 5G’s high bandwidth and speed will not only support faster data transfers but also help companies capture and analyze larger volumes of data and produce actionable insights to drive productivity improvements, cost reduction and new business models.

The use of robotics on the manufacturing floor will be taken to new heights with 5G. When powered by the previously unimaginable connectivity speeds of 5G, smaller, AI-powered robots will be able to solve complex, potentially dangerous production tasks with optimal agility and precision. Fast communication speeds also will enable companies to use robots for hyper-personalized product development on a massive scale.

Finally, 5G will make next-generation technologies, including AR and VR, mainstream manufacturing tools. Although some manufacturers are experimenting with AR and VR technology already, the enhanced AR and VR capabilities made possible by 5G will likely encourage even more companies to implement these tools. For example, these empowered tools will help manufacturers with part and product design, shop-floor training, supply chain data visualization and more — on the go and without lag and latency issues. Plus, as capabilities become faster and smarter, the technologies will quickly learn from their own mistakes and find new ways to minimize costs and optimize equipment time.

Manufacturers that invest in 5G technology early will reap the benefits and pave the way for the future, bringing hyper-personalized offerings and high-quality aftermarket capabilities to their customers. The opportunities and applications are limitless.

Pioneering Supply Chain Integrity

Fri, 21 Jun 2019 00:00:00 -0500

The importance of social responsibility, economic sustainability and ecological stewardship continues to intensify for corporations around the world. A Washington Post article highlights this development with an in-depth look at child labor in the cocoa industry. The Wall Street Journal examines how Bayer is working to earn back consumer confidence after thousands of lawsuits alleged that Roundup causes cancer. And Bloomberg reports that Gap Inc. is acknowledging problems associated with the garment industry’s extraordinary water requirements.

“Cocoa’s child laborers” shines a light on “an epidemic of child labor that the world’s largest chocolate companies promised to eradicate nearly 20 years ago.” The story centers around five boys, ages 13-15, who work on a cocoa farm in the Ivory Coast making 85 cents a day. They crossed the border from the impoverished nation of Burkina Faso to earn money for their families.

In addition to those whose parents send them away, at least 16,000 children are trafficked into the cocoa industry each year, according to a 2018 Tulane University survey.

A cocoa farmer told the Post that he agrees the situation is wrong but has no alternative. “The low price for cocoa makes life difficult for everyone,” he explained. Ivorian cocoa farmers’ annual household incomes are around $1,900 — significantly below World Bank poverty levels.

“Chocolate companies missed deadlines to uproot child labor from their cocoa supply chains in 2005, 2008 and 2010,” the article states. “As a result, the odds are substantial that a chocolate bar bought in the United States is the product of child labor. About two-thirds of the world’s cocoa supply comes from West Africa.”

Indeed, Mars can trace only 24% of its global cocoa supply back to farms; Hershey and Nestlé about half.

Meanwhile, “Bayer to Invest Billions in Weedkillers in Wake of Roundup Controversy” states that the chemical giant is in “one of the worst crises in its 155-year history. The company has lost the first three jury trials to plaintiffs claiming Roundup gave them non-Hodgkin lymphoma, with the highest award topping $2 billion.”

In response, Bayer says it will offer more choice for growers and cut its environmental impact 30% by 2030 with new technologies, more precise weedkillers and enhanced product-safety transparency.

At international clothing retailer Gap Inc., the focus is on the curtailing the garment industry’s tremendous water usage. In “Gap Targets ‘Borderline Irresponsible’ Water Use With India Hub,” author Jordyn Holman says the business is collaborating with textile manufacturer Arvind Ltd. to open a facility in Ahmedabad, India — a nation in which 70% of the water is contaminated and 75% of people don’t have access to clean drinking water in their homes. The partnership will study ways to reduce water waste in garment production.

According to Arvind, its denim mill consumes 8 million liters of fresh water every day — more than three times an Olympic swimming pool. The new facility aims to use enough wastewater to save 3 billion liters of fresh water by the end of 2020.

A tool for supply chain excellence

The Washington Post story also cites industry insiders who say that, when corporations including Hershey, Mars and Nestlé made the promise to eradicate child labor, “the companies had little idea of how to do so.” A recent ASCM report had similar findings: 83% of industry professionals consider supply chain ethical dimensions either extremely or very important, yet fewer than four in 10 companies are monitoring their networks for ethical practices.

That’s where ASCM’s Enterprise Certification comes in. This pioneering certification will help corporations assess the ethical, ecological and economic aspects of their supply chains. Criteria focus on anti-corruption, human rights, enterprise risk management, climate strategy, product life cycle stewardship and more. The standards serve as both metrics and a diagnostic tool, providing insights into supplier quality, development and selection, as well as where continuous improvement and supply chain strategy can offer key advancements.

Learn more about how earning the Enterprise Certification can help your organization showcase its supply chain excellence, become more responsible and sustainable, and tap into the power of supply chain to address pressing global issues.

Meat-Free Burger, Hold the Stockout

Fri, 14 Jun 2019 00:00:00 -0500

When you envision eating at Burger King, Del Taco, TGI Fridays or White Castle, nutritious plant-based food probably isn’t part of the picture. But in an effort to attract new diners — particularly people seeking healthy, sustainable foods and those following special diets — about 20,000 restaurants across the United States now offer imitation meats such as those produced by Beyond Meat and Impossible Foods.

“We want to remain relevant,” Jamie Richardson, vice president for corporate relations at White Castle System Inc., told The Wall Street Journal. His company was one of the first chains to offer Impossible Foods’ beef substitute last year. Now, Richardson credits the introduction with White Castle’s recent 4-percentage-point sales increase.

Likewise, Burger King locations selling Impossible Whoppers experienced a 17% month-to-month increase in visits — and that’s compared to a 2% average dip across all of its stores.

“Fast-food restaurants are rushing to add meat-free burgers to their menus, hoping these higher-priced alternatives will help them capture additional traffic and dollars,” write Jacob Bunge and Heather Haddon in the Journal article. “Beyond Meat’s shares have nearly quadrupled from its May initial public offering price, valuing the company at $6 billion. Impossible Foods raised a further $300 million from private investors in May, lifting total funding to $750 million.”

With such incredible demand growth, plant-based-foods suppliers are struggling to fill orders. Impossible burgers are Craft & Crew Hospitality’s second-most-popular menu item, even though they are $4 more than a regular burger. Unfortunately, the Minneapolis-based restaurant group hasn’t received shipments for weeks.

In response to shortages such as this one, Beyond Meat has opened a new facility and recruited producers to triple production capacity. Impossible Foods hired 25 additional production employees. “It will take us some time to get back into that synchronization of supply and demand,” said Chief Financial Officer David Lee.

Representatives from both companies believe greater scale will lower production costs. In fact, Beyond Meat says its products will match the price of ground beef within five years.

Bon appétit

As consumer preferences evolve, it’s crucial to explore new and different ways of thinking about supply chain. From planning and procurement to production and delivery, ASCM 2019 features more than 65 educational sessions covering all aspects of the extended supply chain.

MIT’s Yossi Sheffi will present “Going Green Is Not Black-and-White,” which explores why it’s essential to monitor consumer willingness to pay more for green products. This knowledge is critical for any company considering investing in sustainability in order to bring about meaningful change.

“Beyond the Millennial Mindset: What You Need to Know About Gen Z,” presented by award-winning speaker Lisa Ryan, will offer insights into the next generation to dominate the market, why they are so different from their predecessors, and strategies to attract these sustainability-oriented consumers to your company — both as customers and potential employees.

Early-bird pricing for ASCM 2019 will end after June 30. Take the opportunity today to join us in Las Vegas — a city full of internationally renowned chefs serving cuisines to satisfy any appetite.

Signaling Truth amid the Noise

Mon, 10 Jun 2019 00:00:00 -0500

Editor’s note: Hailed as “the most influential foreign policy adviser of his generation” by Esquire magazine, Fareed Zakaria is host of CNN’s “Fareed Zakaria Global Public Square (GPS),” a Washington Post columnist, contributing editor at The Atlantic and a bestselling author. He was recently named a “Top 10 Global Thinker” by Foreign Policy magazine, which describes his show as “a rare haven of smart takes on world affairs.” SCM Now magazine Editor-in-Chief Elizabeth Rennie recently had the opportunity to speak with Zakaria, who will present a general session at ASCM 2019, about being a journalist today, how to ensure people of all experiences and skill levels can be successful in the labor markets of the future, and the importance of maintaining a global perspective.

Rennie:What does it mean to you to be a political analyst and journalist in this day and age?

Zakaria:I’ve always approached journalism from the point of view that it is many things. It has to be entertaining and it has to be lively. But it is fundamentally public education. That is the purpose of journalism, that is why it’s particularly important to democracy, and that is why it’s the only industry protected by the American Constitution. I take that charge seriously.

I understand these are for-profit businesses. You have to keep the viewer’s attention. You have to keep the reader’s attention. I don’t forget that, ever. But you do have to remember it’s not just about that. We are inundated with noise right now … . Much of it is trivial nonsense. Figuring out what the signal is within that noise — what is really important and what is lasting — is a more urgent and important task now than ever before. It’s going to be the way of the future. We are drowning in data and drowning in information while searching for knowledge. In that circumstance, trying to provide intelligent journalism is an even more worthwhile enterprise.

Rennie:More people are captivated by what’s going on, but there’s also a fair amount of hostility toward the press. How do these things influence your perspective on the profession?

Zakaria:It’s fascinating, exciting and inspiring. There’s a lot of news. A lot of it is important because these are big things happening in the world: the rise of populism, the election of Trump, Brexit, the rise of these new populist forces. They’re consequential.

There is also a piece of this [that] is kind of an attack on the free press — an attack on journalism and truth and facts. You feel as though your job is more important and that you are doing something crucial. … Despite having a certain amount of pressure on the media, the media has not buckled. The media has been able to perform its essential function of investigation, truth-telling and being a check on any kind of power. … These institutions have managed to function despite a lot of pressure on them. You feel like, when you get up in the morning, you’re doing something important. For that reason, it’s inspiring.

Now, would I prefer for the health of democracy that there weren’t these attacks on the media? Yes, I would. All things being equal, I would prefer not having the President of the United States call the press the “enemy of the people.”

Rennie:There have been a few times in your career when you faced a different challenge: You have been at the center of some plagiarism controversies. Can you tell me what that was like for you?

Zakaria:It was devastating because I try to pride myself on not just the professionalism of my work but my personal integrity. To have it questioned was devastating. There were places where I was sloppy, and I was very regretful of that and apologized. Four news organizations looked into it; all concluded that, where there was a problem and there was sloppiness, there was no plagiarism.

It was still a terrible feeling to have made mistakes. It is a terrible feeling to let people down. It is a terrible feeling to have fell short of my own standards. What I tried to do was just buckle down, work harder and make sure that the work is even more careful and well-sourced — without even a hint of an error anywhere. I hope that people will judge it in the context of a career.

Rennie: Absolutely. Journalism as a career in the digital age is a huge challenge. Having to produce constant content, drive traffic, get clicks — they all threaten accuracy and make it easy to lose control over the information you’re presenting. Yet, as you say, we can think through something and make the right decision. This is actually an interesting segue to my next question, which is about your views on machine learning, human-robot collaboration, artificial intelligence (AI) and similar advances. How will humans use their unique abilities to succeed in the labor markets of the future?

Zakaria: There are limits to what AI can do and limits to what machine learning can do. … AI is a very powerful way to assist human beings in doing things but won’t replace them altogether. And as you say, there are a certain amount of common-sense skills that computers simply cannot, at this point, acquire. There’s judgment, there’s ethical choices, there’s the communication of ideas to other human beings, there’s empathy. It’s not one thing; there’s a whole range of things that human beings are actually much better at.

There are certainly going to be areas where a computer and AI just take over something routine. … The emphasis then becomes, for the human being, on the strategy, on the judgment, on how to think — which is not a bad thing. In a sense, what human beings will be free to do is spend more time on the higher cognitive functions — problem-solving, judgment, strategy, human relationships and teamwork — rather than very routine mechanical processes. If we can work this out correctly, we will find that it has the potential to allow human beings to do more interesting things better and to leave the duller things for the computer.

Rennie: What strategies do you believe are necessary in order for us to “work this out correctly,” as you put it?

Zakaria: At the end of the day, there is going to be pressure on people who have medium skills and can only do very simple tasks. We can’t pretend that this isn’t the case. There is going to be a displacement of labor, but I don’t think it’s going to be as widespread and universal as everyone makes it out to be. Unfortunately, like everything that’s happening here, you’re sorting the population yet again into winners and losers. The winners take all, and the losers get left with very little.

On this issue, I have a very ambitious idea, which is that we should approach training, retraining, upskilling the way we approached helping the American labor force after World War II, which was the GI bill. If you think about the GI bill, it was basically a system where you said, “The public sector will pay, the government will pay, coursework will be provided, and colleges will enroll anyone. They will take people in. And industry will be encouraged to help these GIs get jobs afterward.”

Think about a triangle. The private sector tries to help explain what are the needs of the time — what are the skills that are lacking? The educational establishment tries to provide the courses and the teaching. And the government largely pays the bill. … It’s not going to be cheap. I think that’s the part that we have to accept: When you talk about these issues, there’s no free lunch.

Rennie: Looking beyond the American labor force now, in a recent column you talked about isolationism and the challenges it causes. Why is maintaining a global perspective so essential these days?

Zakaria: The fundamental reality of the world — the economic environment we live in now — is that it’s global. … The economy has become genuinely a global economy. As the world becomes more digital, the barriers become meaningless. How can you not think in global terms? How can you not be thinking about your sources, your ideas, your financing, your capital, your execution, your market?

You have to think of them all on a global scale — not just because that’s where the opportunities are, but because, otherwise, you will find you’re going to get killed by somebody else who is thinking globally. Somebody else can source material or labor cheaper than you; they can find markets you can’t find. If they’ve benchmarked to a business process or a technology that’s been successfully proven in some other country, and you’re not looking at all that, you’re at a huge competitive disadvantage. … There are many, many areas like that where we have a lot to learn from the world. You can close yourself off, but you will pay a price.

Rennie: How can supply chain management professionals use this global perspective to help make supply chains a force for good? At ASCM, we believe strongly that supply chain really can create a better world. You’ve made similar comments about how globalization improves economies and lives. What message would you share with our members about something they can do to help make this possible?

Zakaria: I think the most important thing they should do is to really try to benchmark to the best. In America, we don’t do that enough because it’s a very large internal economy, we’re a very large country. ... There isn’t that tendency to constantly look around.

There’s a lot of really interesting stuff happening around the world. Particularly, if you ask yourself, “How are companies in smaller countries doing things?” — because they’re more pressed; they’re under pressure. You might find that you’ll learn a lot more than you realize. It’s a very good discipline in any case, but it is particularly important in today’s world.

Rennie: You’ll be joining us in Las Vegas this September. What do ASCM 2019 attendees have to look forward to from your keynote?

Zakaria: They can look forward to what I hope will be an interesting, entertaining and educational picture of the world and the major trend lines. As I say, I try to focus on the signal amidst the noise — the things you really need to pay attention to and what is really important. I have to confess, though: I can’t tell you today because I never give the same talk twice. I’ll be looking at what’s going on and make sure that I’m talking about the world that you’re actually living in that month, that week, that day.

Why Dollar General Is the Master of Its Own Destiny

Fri, 07 Jun 2019 00:00:00 -0500

If you are in the United States, chances are excellent that there is a Dollar General within a five-minute drive. In fact, the discount chain’s enormous footprint reaches so many rural areas that 75 percent of its stores are in towns with 20,000 or fewer residents. This is by design. Previous CEO David Perdue once told The Wall Street Journal that the company’s master plan was to set up shop where Walmart wasn’t. Many of these places are food deserts — areas where people have limited access to affordable, nutritious food.

Now, Dollar General wants to expand into fresh and frozen foods.

“Its rural tilt helps explains this push,” writes Anna Hensel in Digiday magazine. “It gives Dollar General a unique opportunity to become the only perishable grocer in parts of the country that don’t have the option to choose between a Walmart, a Target and a Kroger.”

The company’s investments in this initiative should reap rewards in both foot traffic and sales. And that’s on top of the significant savings it already enjoys as a result of operating in inexpensive areas.

Dollar General sells private brands and a limited number of items from manufacturers including Clorox, Coca-Cola, Energizer, Kellogg’s, Kimberly-Clark, PepsiCo, Procter & Gamble and Unilever. With only 10,000-12,000 stock keeping units per 7,000-foot store, its shelves look nothing like the extensive options available at traditional retailers. This strategy involves buying in bulk, which gives Dollar General more purchasing power with suppliers. Plus, a small number of products in small stores means fewer stocking associates.

To support its new perishable food aims, the company is launching two logistics initiatives: DG Fresh and Fast Track. DG Fresh involves building its own distribution centers to ship and store the food; Fast Track speeds up stocking processes.

“In addition to the gross margin and in-stock benefits, DG Fresh will eventually allow us to control our own destiny in [fresh and frozen food],” CEO Todd Vasos explained during a first-quarter earnings call, adding that the ultimate goal is to carry produce.

Dollar General reports 29 consecutive years of growth. In 2019, the business will open 975 new stores and remodel 1,000. Mary Hanbury writes in Business Insider, “While competitors have been squeezed by growing competition online and from Amazon, Dollar General and the dollar-store sector, in general, have flourished, swooping in and offering customers prices that are 20-40% lower than grocery and drug stores.”

Essential S&OP

The transition to stocking perishable food will require Dollar General to employ exceptional sales and operations planning (S&OP). The company’s S&OP team — and industry professionals around the world — would make meaningful strides toward such goals by attending next week’s Best of the Best S&OP Conference in Chicago. This event will explore forecasting and demand planning; integrated business planning; collaboration with sales, marketing and finance; supply chain risk management; product launches; and much more.

The educational sessions are specifically designed to help attendees implement or improve S&OP at their organizations while they earn continuing education credit and maintenance points toward accounting, analytics, ASCM, IBF and related certifications.

I hope to see you at the Best of the Best S&OP Conference — where, in case you’re wondering, you will find eight Dollar Generals within a 10-mile radius.

The Hidden Costs of Cheap Bananas

Fri, 31 May 2019 00:00:00 -0500

"The sticker price of bananas seems to remain remarkably steady, almost if by magic,” writes Joe Fassler in The New Food Economy. In reality, bananas are cheaper today than a decade ago. But the lower grocery bills are making things a great deal tougher for banana plantations, their employees and the environment.

When Americans first started buying bananas, they were a pricey luxury item. However, in the late 1800s, the first true banana supply chain was established. Dan Koeppel, author of Banana: The Fate of the Fruit that Changed the World, explains that this network dominated land, labor, logistics, transportation and distribution — and drastically reduced banana prices. “Americans couldn’t get enough,” he writes.

Today, bananas are the most popular fruit in the United States, purchased by nearly 70% of people. According to the U.S. Bureau of Labor Statistics, at 57 cents a pound, they are also the cheapest item in the produce department by far. This low price tag is essential because they ripen so quickly. “Bananas have always been a volume game,” Fassler explains. “Buy them in huge quantities, sell them cheaply before they spoil, hope to make a little bit per bunch.”

Yet the costs we don’t pay at the register have led to chronic underpayment of workers, low job security, child labor practices, loss of biodiversity, water pollution and climate change. After dozens of interviews with plantation managers and laborers in Columbia, the Dominican Republic, Ecuador and Peru, Fairtrade International found that even a 20 cent premium per pound diverted back to producers would be meaningful progress.

Such models do exist. Because of lobbying from the Coalition of Immokalee Workers, many fast-food restaurants now pay a penny more for tomatoes. The problem with applying this philosophy to bananas, Fassler notes, is that grocers rely on artificially low prices to win customers. In fact, when Amazon bought Whole Foods and cut the cost of its Whole Trade bananas by 38%, there was an industrywide ripple affect. The U.S. Bureau of Labor Statistics says the average price fell by almost two cents, the greatest drop in years.

“Perhaps more than any other item, bananas send a message about a store’s attitude toward freshness and price point,” Fassler writes. “Bananas make a powerful statement about values. But they’re also something of a liability.”

Make an impact

Eradicating exploitation from supply chains demands pioneering corporate social responsibility (CSR), a comprehensive understanding of supply chain risk management and an unwavering focus on sustainability. ASCM is supporting our members around the world as they strive to achieve these goals and create supply chains that improve lives, communities and economies.

ASCM membership connects you and your organization to essential supply chain education, including ASCM Enterprise Certification, the first comprehensive evaluation of the ethical, economic and ecological dimensions of a supply chain. Our events, seminars and webinars offer education from leading experts. And SCM Now magazine and our blog feature the latest insights into CSR, risk management and climate strategy.

If you are a member, learn about and access these and many more benefits. If you are not a member, I encourage you to join us today.

Is Your Supply Chain Making an Impact?

Fri, 24 May 2019 00:00:00 -0500

Mismanaged waste causes hundreds of thousands of the world’s poorest people to die each year, according to a recent article in The Guardian. Many of these deaths are easily preventable, particularly those that stem from the dangers of discarded plastic.

“While mismanaged waste has been a problem for decades, the growth of plastic pollution, which does not break down in the environment, is adding a fresh set of problems to an already dire situation,” writes Fiona Harvey. “Plastic waste is blocking waterways and causing flooding, which in turn spreads waterborne diseases. When people burn the waste to get rid of it, it releases harmful toxins and causes air pollution. Every second, a double-decker busload of plastic waste is burned or dumped in developing countries.”

Further intensifying the problem, many of these people must make their livings by collecting the waste. Some even live on garbage dumps, scavenging for what they can. These individuals are exposed to pollution, risk serious physical injury, and too often face deadly landslides and explosions from gas buildup.

Additionally, as more marine animals, cattle and goats ingest plastic, this significantly impairs fishing and agriculture, especially in poorer countries. And when large amounts of plastic waste wash up on shorelines and coral reefs, tourism suffers — something on which many of these nations rely.

Sir David Attenborough, vice-president of the conservation charity Fauna & Flora International, is quoted in the article: “We need international action to support the communities and governments most acutely affected by this crisis. …[And] we need leadership from those who are responsible for introducing plastic to countries where it cannot be adequately managed.”

Award-winning commitment

The kind of leadership Attenborough describes is vital for today’s global business leaders, particularly those of us in supply chain. To that end, ASCM is committed to supporting and recognizing organizations that exhibit pioneering corporate social responsibility (CSR), proven business integrity and an unwavering focus on sustainability.

One way we are doing this is through the ASCM Award of Excellence — Making an Impact. Entrants to this brand-new award category must demonstrate ethical labor practices, reduced environmental effects and strong social policies. Our judges will be looking for responsible operations, clear reporting, honesty, transparency, and the systematic integration of CSR initiatives throughout the entire supply chain.

There is so much promise in the power of supply chains to address pressing global challenges, such as the plastic crisis. If your company is striving to achieve brighter futures for individuals, companies and communities, I encourage you to enter the 2019 ASCM Awards of Excellence. The deadline is May 31, and each winner’s story will be shared at ASCM 2019 and in the pages of SCM Now magazine, so we may all continue learning from each other and working together to create a better world through supply chain.

People Skills: An Aerial View

Tue, 21 May 2019 00:00:00 -0500

My daughter and I have been looking at colleges recently, and I must admit that I’m both proud and a little dismayed that her top choices are thousands of miles across the United States. But traveling with her and exploring new parts of the country together has been a wonderful experience that I know will bring us both fantastic memories.

Recently, she and I were on a flight from our hometown in Charlotte, North Carolina, to Los Angeles. I ended up chatting with the man next to me, who turned out to be a former Navy logistics officer. He now consults with companies around the globe to help identify areas for improvement with their logistics, transportation and distribution processes.

I shared with him that I was with the Association for Supply Chain Management (ASCM) and was excited to be taking on the role of editor in chief of our flagship publication, SCM Now. Ever the journalist on the hunt for a story, I also asked him if he had any ideas for subject matter that would be interesting to our readers. Considering the type of consulting he does, I assumed he would pitch me ideas on the industrial internet of things, last-mile challenges, robotics and automation, or maybe cybersecurity. But everything he talked about had to do with people.

Soft skills, the talent pipeline, managing change: These are the areas where he finds the most opportunities for advancement and transformation at his client companies.

He inquired about my own people skills. Alas, I had to admit that I did see areas for improvement there. Although I couldn’t be luckier to work with my team here at ASCM — especially our amazing SCM Now editor, Kia Wood — I have found that I have a difficult time collaborating with people who don’t seem passionate about the job. I confessed that I’m just not the most patient person in the world.

He then asked me if I’ve ever had an author submit a story for my consideration, which at first glance seemed unpublishable. Perhaps the hopeful contributor did not speak English as a first language. Or maybe the story was extremely scholarly in its approach: appropriate for a journal, but not a trade magazine.

I replied, “Of course. If the content is great, it doesn’t matter if it needs a substantial developmental edit. My job is to be the writer’s coach, and I’m happy to put in the time.”

This, of course, was the aha moment he had planned for me. People often come with challenges that can seem complex and time-consuming. But if the content is there — talent, ingenuity, problem-solving skills — then the effort you expend figuring out how to coach them is well worth it.

SCM Now magazine’s resident management expert, Michael Morand, CPIM-F, CSCP-F, CLTD-F, notes that sometimes this requires a creative approach. In his most recent department, he writes, “The human element of teams requires managers to consider how knowledge of science, art, philosophy and social sciences will be received and understood by associates — and there is no shortage of ways in which these practices may be applied. One could leverage scientific management to improve efficiencies, behavior theories to improve motivation and leadership, and quantitative management for analytical and optimization techniques — all the while cautioned by contingency theory to consider unique conditions.”

I will be keeping these strategies in mind here at ASCM, and I will teach my daughter about them too. As she embarks on this exciting journey toward her future career, I want her to always put people first and grasp every opportunity to learn from those with diverse personalities, motivations and perspectives.

New Tariffs Threaten Technology and Agricultural Supply Chains

Fri, 17 May 2019 00:00:00 -0500

The escalating tariff war between China and the United States is set to shake up the consumer electronics and agricultural industries.

On Monday, the Trump administration proposed a plan to roll out tariffs as high as 25% on almost all Chinese goods not yet subjected to the rising rates. Nikkei Asian Review reports that cell phones are the largest affected product by value at $43.2 billion, followed by laptops at $37.5 billion. These high-tech items contain parts sourced from around the world but often are assembled in China, so the tariffs will have ripple effects across Asian supply chains.

Foxconn, a Taiwanese iPhone assembler, announced plans to expand production in India to diversify its supply chain but noted that it will be difficult to build factories that could ever replace its Chinese plants. Product design and after-sales service companies in the United States also will feel the effects.

Technology exporters are already talking about the burden the new tariffs will place on their businesses. Anna Kam, whose company Sky City 2K exports video game console controllers, was quoted in the South China Morning Post: “This will completely kill my U.S. market.” She explained that 85% of her company’s controllers are sourced and manufactured in mainland China and then transported to Hong Kong before being shipped to customers in Europe and on the U.S. West Coast. As her business typically operates on a 12-15% profit margin, it would be decimated by 25% tariffs.

In the United States, CNBC reports that American farmers are among the hardest hit by China’s newest tariffs. The U.S. agricultural industry already is grappling with the lowest net farm incomes in more than a decade and historic Midwest flooding in March. Effective June 1, it must deal with expanded agricultural tariffs as high as 25% on a variety of food and beverage items, among other products.

Preparing for disruption

These tariffs between two major economic powers present serious risks to industries and economies around the globe. Organizations in both countries, as well as their customers, must consider how to best manage this global market risk. For some, the answer may be to diversify their supplier bases; others may decide to reshore, redesign their products or services, or adopt other strategies.

But before making decisions and adjusting their strategies, supply chain managers need to take a step back, look at the issue from a global perspective, and consider other impending disruptions and risks.

Renowned foreign policy advisor and journalist Fareed Zakaria will share his insights into the most important geopolitical and technology disruptions at ASCM 2019. His interesting and entertaining picture of the world and major trend lines will help attendees zero in on risks and opportunities. Join us for ASCM 2019, September 16-18, in Las Vegas to hear from Zakaria and a host of insightful keynotes and educational speakers.

Three Ways to Uncover the Hidden Job Market

Fri, 10 May 2019 00:00:00 -0500

The “hidden job market” can be a confusing expression, as most employers aren’t going out of their way to actually hide available jobs. In fact, the hidden job market simply refers to open positions that are not listed in the public domain for candidates to discover and apply for. So, why would a business choose not to publish an open position? There are many reasons:

The company needs to replace an employee who is not performing well, and human resources doesn’t want the current occupant to know he or she is being terminated until the replacement has accepted the position.
The employer is concerned about revealing strategic or confidential initiatives to its competitors through a job posting.
To avoid being inundated with unqualified applicants, the organization chooses to use other recruitment channels, such as employee referrals or direct sourcing.
Openings are not posted because the company fills these roles through a search firm or a recruiter. This is particularly common for executive-level positions.

There’s no way to tell how many hidden jobs are filled each year, but one thing you can count on is that there’s far less competition for hidden jobs than for those that are advertised. To advance your career by finding and tapping into the hidden job market, follow these three strategies:

Think “outbound.”As the term implies, this tactic consists of reaching out to and engaging individuals within your network, connecting with hiring authorities, and targeting companies that could help your job search. To improve your ability to engage the right people

identify the top 25-50 employers based on the most important criteria for you, and maintain a laser focus on what’s going on in their organizations
send a personalized invitation — five sentences or fewer — to key contacts, such as heads of supply chain, department leaders, general managers of factories and distribution centers, and employees who do the same work as you
join supply chain associations; attend their networking events; and leverage membership directories to schedule meetings with members from your local chapter who could help with your job search, especially those who work at your target employers
keep in touch with classmates and facilitate networking opportunities through alumni associations, or search for and reach out to supply chain professionals on LinkedIn who attended your university
make an effort to reconnect with former colleagues — you never know where they might be working now
join LinkedIn groups related to your profession or interests and engage in conversations with the goal of helping others, sharing useful articles and the like.

Think “inbound.”Attract the hidden job market to you. The methods here are similar to search engine optimization, which is the process of maximizing the number of visitors to a website by ensuring that the site appears high on the list of search engine results. Keywords are critical to success — the terms themselves and where and how often they are used. Whether it’s your LinkedIn profile, a personal website, your blog or your resume, when written correctly, you can significantly improve your ability to attract job offers. Start by writing down a list of the most popular keywords used to describe your job; industry; and functional, technical and leadership skills. Use a keyword research tool to learn the most common keywords being searched for on the internet by people with your background, skills and experience.

Next, search for the most popular keywords — in particular, in the job title and keyword search fields — on LinkedIn’s advanced search page. This will help you find LinkedIn members who work in your profession and have similar skill sets and industry focus. Pay very close attention to the profiles that appear on the first page of the search results and ask yourself why they are at the top of the list. Analyze these profiles, taking notes on what keywords are used most often and where they appear within each profile.

Without copying from anyone’s profile, as this would be a form of plagiarism, use what you learn to optimize your own information — on LinkedIn, Facebook, Twitter, Quora, your professional website or blog, and other websites. Keep in mind that improvements to your search rankings won’t happen overnight; you may need to experiment and tweak the information you present to drive better results.

Then, set your LinkedIn profile to “open to new opportunities” to signal that you are receptive to being contacted by recruiters. You can check a box to hide the setting from your current employer. (Keep in mind that nothing is fool-proof, and it’s always possible that someone from your current organization will see that you have triggered this preference.)

Write and publish content in your areas of expertise. There are numerous media platforms for publishing content: supply chain trade magazines such as SCM Now (learn more at ascm.org/editorial), Reddit, Medium and many more. This is a great way to showcase your experience, know-how, and always highly valuable communication skills to peers and potential employers. Similarly, consider giving a speech or presentation to your local ASCM chapter; other industry associations or networking avenues such as ToastMasters, which is dedicated to the art of public speaking.

Think “nurture.”No one wants to receive a call from someone seeking employment help after years of zero contact. Don’t make the mistake of only interacting during an active job search. Keep your network alive — it is a primary conduit to the hidden job market and a key factor in your career success. Stay active online; think about how you can help others; and schedule time on your calendar each week to engage, share articles, offer advice, find new contacts and comment on posts. Consider using a low-cost customer relationship management solution to store contacts and notes and set recurring reminders to prompt you to reconnect with someone.

Following these steps will help you engage and attract others while cultivating your network. This way, when a great hidden opportunity does come along, your qualifications will be no secret.

Can a Robot Do My Grocery Shopping?

Fri, 10 May 2019 00:00:00 -0500

Grocery shopping, though a necessary part of life, can be a chore. You write a shopping list, perhaps check the supermarket website for what’s on sale, try not to forget your reusable shopping bags, drive to the store, fill your cart, wait in the checkout line, scan your coupons or loyalty app, pay, load your groceries in your car, drive back home, and put everything away. Week after week, month after month, year after year. It’s no wonder that retailers and food companies are always looking for ways to make shopping more exciting and convenient.

Decades ago, customers used to place their grocery orders at a store counter and wait for clerks to bring their items to them. As you can imagine — or maybe you can remember — shopping became more exciting when stores grew to include aisles of goods customers could have the joy of selecting themselves. Shoppers could pick exactly which loaves of bread, pieces of fruit, and boxes of cereal they wanted and maybe discover some new ones along the way. Since then, grocers have continued to add new enticements, including delicatessens, coffee shops, prepared meals, frozen foods, kiosks with samples and self-checkout stations.

Ironically, many stores offer a service that harkens back to the old way of shopping: Customers place their orders online and a clerk selects their products and prepares them for pickup. Many retailers also have home-delivery, which A&P offered back in 1930 (Lewis 2018).

But consumers still want more:

They expect food to be available when, where and how they want it. Because consumers are increasingly time-strapped, they want to get their food faster and in a form that requires minimal preparation because they don’t have hours to spend cooking. They also want to order their food as frequently as they need it, rather than having to spend time creating a long grocery list and shopping just once a week. If a given store can’t deliver on these needs, customers will go elsewhere.
They want quality items. Consumers expect stores to offer high-quality, fresh groceries that have been handled and stored safely to prevent the spread of foodborne illnesses. On top of this, they want packages to clearly label allergens, highlight the origin story of the product and call out any undesirable additives.
They want more value for the same price. Consumers are demanding greater food variety, higher quality, faster deliveries, ready-to-eat meals and more, but they do not want to pay extra for these features. Consequently, all members of the food supply chain must work to reduce or control their costs.

CONSIDER THE COMPLEXITIES

These are tough demands on an industry that already is operating with tight margins. Sometimes it seems as though the best option is to automate more processes. Soon there could be drones handling agricultural responsibilities, 3D printers making food, robots roaming store aisles handling the e-commerce grocery fulfillment process and driverless trucks delivering orders. These innovations certainly could save money and offer greater convenience in the long run.

The main challenge, though, is that food supply chains are so complex. For starters, the origins of different foods vary widely. Locations can be everything from large, standardized wheat fields to backyard berry patches. They can be owned by large corporate conglomerates or individual families. Some producers may use pesticides or growth hormones while others prefer more organic approaches. Caring for livestock and watering, monitoring and harvesting crops may be done by hand or with the help of the latest technologies. Regardless of the point and method of origin, all of these of products become a part of a food supply chain.

After the food has been grown, it must be processed to make it edible. Slaughterhouses trim meat and package it into sellable sizes. Canneries wash, size and seal vegetables in cans. Processors transform cereals, sugar, flour and spices into a variety of consumer packaged goods. Juice houses squeeze fruits and bottle the drinks for convenient consumption. In short, each food preparer has its own method, challenges and considerations.

From this stage, food makes the journey to the retail channel. Some items cross borders, undergo inspection and basically receive the proper credentials to enter the country of sale. Other items require careful refrigeration or freezing and temperature monitoring. In addition to these challenges, distributors must be able to move products to the right place at the right time to meet consumer and retailer demands.

Food can be sold to consumers through a variety of retailers, including farm stands; small, local grocery stores; large chain grocery stores; mass merchandisers such as Walmart and Target; club stores; dollar stores; gas stations; convenience stores; e-commerce retailers; and more. Then, the food finally reaches the consumer.

But this isn’t the end of the supply chain. There still is waste management and recycling. Of course, municipalities typically process the discarded packaging materials after individuals consume the foods and beverages, but retailers and their waste management services also must process the waste from food that is not sold or consumed. Baked goods, cooked meats, and fruits and vegetables have relatively short shelf lives and need to be disposed of frequently. Some stores may donate the food to homeless shelters or other community organizations, but anything that is deemed unfit for human consumption must be discarded. Nelson (2018) estimates that one-third of the food produced in the world for human consumption — or 1.3 billion metric tons — gets lost or wasted. Interestingly, “Much of the food waste produced around the world can be traced back to inconsistencies in the supply chain: inventories aren’t recorded, suppliers aren’t informed and quality isn’t taken into account,” he writes. Blockchain could help create more accurate supply chains and reduce this waste. However, at present, most retailers do not have programs in place to report on or reduce their food waste (Redman 2018).

Improving entire food supply chains is difficult because there are so many partners that need to handle a given product through its life cycle. Each network tier also incorporates a wide variety of business models that handle their step of the process differently. Because of this, it is challenging to achieve total alignment.

AUTOMATED APPROACHES

The use of automation and artificial intelligence, especially in the form of robots, is increasing throughout the food supply chain. GPS-based applications help farmers with crop planning; field mapping; soil sampling; planting and fertilizing; tractor guidance; crop scouting; variable rate applications; yield mapping; and working in low-visibility conditions, such as rain, dust, fog and darkness (National Coordination Office for Space-Based Positioning, Navigation and Timing 2018). Farming tools now come equipped with sensors that help determine how much fertilizer is needed for the soil and when to water crops. Automatic weeders and harvesters help farmers produce crops more efficiently. Fruit farmers are especially interested in new automatic fruit-picking equipment that can prevent bruising. Several companies are working on next-generation picking machines that move autonomously and handle these delicate items, but all are years away from commercialization (Strong and Hernandez 2018).

In the delivery arena, companies are eagerly awaiting the availability of driverless vehicles to help meet demand for more frequent deliveries. Cincinnati-based grocery chain The Kroger Co. recently announced a partnership with self-driving car startup Nuro to test driverless grocery deliveries. Kroger executives expect that large-scale driverless deliveries, which still are years away, will make the delivery service cheaper and easier to introduce in more rural parts of the country (Haddon 2018a). Drones also are being considered as a delivery vehicle, especially for small, light packages to more remote areas (Haddon 2018b).

At the retail level, Boise, Idaho-based Albertsons Companies has started piloting a micro-fulfillment center concept powered by Takeoff Technologies’ artificial intelligence capabilities. The Waltham, Massachusettsbased technology company’s fulfillment model receives customer orders through an e-commerce interface, uses artificial intelligence-enabled technology coupled with a system of totes and conveyors to pick the items from the store’s inventory, and delivers the orders to a store employee. The human employee checks and finalizes the orders and gives them to customers. When installed, this should greatly reduce the amount of time required for processing individual orders.

THE POWER OF DATA

To support robots and artificial intelligence, technology experts also are moving forward with data collection and analysis innovation. Although bar codes still are the dominant method of identifying and tracking items within the supply chain, radio-frequency identification technology is being considered as a means to collect and provide more information (Roberti 2018). To gather data about various processes, sensors are being added to tools that are connected to the internet of things. Artificial intelligence techniques can interpret this data and stimulate corrective or improving actions.

On an even larger scale, blockchain technology is being developed to more securely integrate supply chain data networks. The agriculture and food supply chain’s global investment in blockchain was estimated to be $60.8 million in 2018 and is expected to grow to almost $430 million by 2023, a compound annual growth rate of 48 percent, according to Reportlinker. The two major drivers for this growth are the intensifying demand for solutions that can help attain complete traceability of food products and the increasing instances of food fraud.

CULINARY CREATIONS

New technologies also are enabling culinary innovations. For example, some food companies are experimenting with 3D printing to create shaped food items, such as chicken nuggets in the shape of dinosaurs or stars (Gasparro and Newman 2018).

To improve traceability, other businesses are experimenting with edible bar codes. Made by combining segments of seaweed DNA, the bar codes are invisible and tasteless (Gasparro and Newman 2018).

MORE IN STORE

More innovations are going to be required toward the end of the food supply chain. With Amazon and other e-commerce giants offering grocery delivery, retailers are realizing that they too must provide online ordering, order pickup and grocery delivery to compete. With 70 percent of consumers buying at least some groceries online within the next five years (Lewis 2018), the presence of human or robot order pickers could clog store aisles and make it difficult for people to shop. Plus, if the magnitude of online ordering is great enough, it may cause inventory stockouts until retailers adjust to the new business model.

Omnichannel grocery shopping will also require retailers to become distribution experts. Although e-commerce represents less than 5 percent of U.S. grocery sales currently, food and beverage sales are growing far faster online than in supermarkets. Forrester Analytics predicts that, by 2022, the U.S. online grocery market will total $36.5 billion, up from an estimated $26.7 billion in 2018 (Haddon 2018c). This means retailers will need to deliver quality food items when and where the customer wants it while keeping prices low. With that challenge still ahead, the food industry is ripe for more technology innovation.

For a list of annotated references about this subject, contact the author at crandllre@appstate.edu.

Be a Supply Chain Ambassador

Fri, 10 May 2019 00:00:00 -0500

“In the first three months of 2019, employees got so much more work done that they smashed productivity forecasts,” writes Alexia Fernández Campbell for Vox Media. “That’s great for businesses (they earn more money) and for the economy (GDP grows faster). The problem is that companies aren’t rewarding their employees for the extra hard work.”

A recent Gallup World Poll bears out the author’s conclusions, finding that 85% of workers are displeased with their jobs.

As I read this article and considered that unfortunate statistic, I couldn’t help but reflect on ASCM’s brand new 2019 Supply Chain Salary and Career Survey Report. With so many people feeling underappreciated and underpaid — in fact, there were a record number of strikes in the United States last year — this survey reveals that supply chain salaries are on the rise and industry professionals truly love their jobs.

The median supply chain salary in 2018 was $80,000, a 3% increase over 2017. Even more importantly, an overwhelming majority of respondents say they are very or extremely satisfied in their jobs.

This report confirms what all of us at ASCM and every supply chain professional already know: Supply chain careers are rewarding, both professionally and personally. We at ASCM are also proud to discover that the median salary for people with at least one APICS certification is 25% higher than those without. And, in addition to the power of APICS education to advance careers, our initiatives related to women in supply chain are paying off: The gap between men’s and women’s salaries is narrowing, especially for professionals under 40, where the difference is less than $1,000.

Put the findings to work

As we continue to face a vast talent gap, this report highlights numerous opportunities to attract more people to the supply chain. But ASCM can’t do it alone; we need your help.

Begin by talking to the young people in your life about why you are passionate about what you do. Describe your job and how it has a positive influence on the entire business, the lives of your customers and the communities in which they live.

Explain why you look forward to staying in supply chain for years to come (93% of respondents believe they will stay in the field; 44% say they definitely will).

And tell them about the work-life balance you enjoy (nearly all respondents receive holiday pay, and the majority receive three weeks or more paid time off, as well as flexible work schedules).

Then, take a moment to download the survey and post it in your social channels. Share something that you’re especially excited about with the hashtag #lovemyjob. As more and more people outside the industry experience our enthusiasm, they will see that supply chain professionals are highly sought after by employers, make a difference at our organizations and have truly fulfilling careers.

Leadership Advice, Woman to Woman

Thu, 09 May 2019 00:00:00 -0500

Recently, I found myself thinking a lot about the challenges that women still face when it comes to proving to others that we can be impactful. Having served in a variety of positions in my 19 years at IBM — and now as chief technology officer at a global power solutions company — I have faced the many challenges associated with achieving leadership success. I have also learned that, oftentimes, women doubt ourselves and stand in the way of our own success.

I was able to push through some obstacles; others stood like walls between me and my goals. Along the way, I learned the ins and outs of advancement:

Stop trying to be a pleaser. Women seem to be hardwired to want to please everyone, never say no and always make someone else’s life easier. But once you decide to focus on doing things that align with your own values, life becomes easier. This is a process, so don’t beat yourself up if you don’t get there quickly. Start with something as simple as choosing a restaurant you’d like to go to. For many women, when asked where we want to eat, our go-to response is, “What sounds good to you?” Instead, tell them exactly what kind of food you’re craving and where you want to get it. Yes, it sounds silly and minute, but when taken task by task, things will improve.

Learn how to handle conflict. A conflict is more than just a disagreement; it is a situation in which one or both parties perceive a threat, whether or not the threat is real. At work, you’re exposed to many different people, work ethics, personality types, and cultural and personal backgrounds. With all these different elements, conflict will occur on occasion. It’s how you handle the situation that will define you as a leader. When facing conflict, follow these steps:

Stay calm, be the voice of reason and never show it publicly if people get to you.
Listen at least 70 percent of the time.
Focus on the positive. Try to create an environment where new and innovative ideas can flourish to give voice to those who want to change things for the better.
Attack the problem, not the person. No matter how frustrated you are with a colleague, treat them with respect.
Negotiate. Leaders who manage through cooperation outlast those who manage through fear or authority. This is how you earn your employees’ trust, respect and loyalty
Remember that having the final say doesn’t really resolve anything.

Take on a leadership role. Get outside your comfort zone. This is one of the best ways to learn and develop new skillsets. Here, again, start with a small task, such as offering to organize an event or spearheading a new project. And once you feel that you’ve reached a measure of success, don’t stop. Take what you have learned and continue to grow and flourish as a leader.

Become a person of value.Women need to maintain relevance by staying curious and acquiring new skills. Establishing a set of core talents will be extremely beneficial in the long run. As you grow and adapt, allow yourself time to become a true expert, then progressively branch out and learn about adjacent or new areas.

Prioritize. Pursuing an ambitious career is never a piece of cake, particularly when you add on establishing a family life. Surround yourself with all the right people, and always keep top-of-mind who you want to come first.

African Swine Fever Hits China’s Hog Industry

Fri, 03 May 2019 00:00:00 -0500

First identified in the early 1900s, African Swine Fever (ASF) has been responsible for the deaths of countless domestic pigs around the globe. According to the 2018 report African swine fever: A re-emerging viral disease threatening the global pig industry, the virus increased rapidly throughout sub-Saharan Africa in the last century. Transcontinental proliferation first occurred in Spain and Portugal, then South America and the Caribbean. A second pandemic arose in Eastern Europe, Russia and Mongolia.

“The latter constitutes one of the most important jumps of the disease so far,” the report authors wrote just last year. They then accurately predicted: “Further spread seems likely, since attempts to control the disease have not been effective.”

Today, ASF is present in all Chinese mainland provinces, once again severely threatening the hog industry. Experts estimate that 200 million pigs could be culled or die during the outbreak. Frank Tang writes in the South China Morning Post that China, which raises about half of the world’s pigs, will face incredible price surges as the deadly virus causes ongoing supply disruption.

The agriculture ministry’s market and economy information department has said that the price of pork could escalate by as much as 70% in the second half of 2019. Another survey by the ministry shows that pork prices surged 22.8% in the past few days from the same time last year.

Production losses from ASF have “eclipsed initial estimates,” according to a RaboResearch report. The study also notes that efforts to rebuild the pig population in China will be complicated by the risk of recontamination. According to senior analyst Christine McCracken: “Sizable breeding herd losses will delay the Chinese pork industry’s recovery. … These losses cannot easily be replaced by other proteins (chicken, duck, seafood, beef, and sheep meat), nor will larger imports be able to fully offset the loss.”

The coming shift in animal protein global trade patterns will create significant opportunities for companies with an exportable surplus and access to China. Unfortunately, it also will produce logistical inefficiencies and raise costs through the entire supply chain, McCracken warns.

Explore threatcasting

Traditional planning and forecasting tools are necessary but insufficient for tackling supply chain threats such as ASF. To effectively plan for such catastrophic events, threatcasting is an essential tool. This conceptual framework enables you to translate research and data into actionable steps, which make it possible to identify, mitigate and recover from diverse and disparate risks.

Threatcasting involves multidisciplinary groups working together to systematically plan against future threats. It encompasses inputs from social science, technical research, cultural history, economics, expert interviews and even science fiction storytelling.

ASCM’s upcoming threatcasting seminar at our annual conference in Las Vegas will provide a practical overview of the process, real-world case studies and hands-on exercises, and a clear explanation of how to apply threatcasting at your organization. Participation also qualifies you for certificate hours contributing to the ASCM Risk Management Education Certificate. I urge you to gain the tools you need to protect your organization now and for years to come by exploring potential visions of the future while demonstrating your risk management mastery.

An S&OP Must

Tue, 30 Apr 2019 00:00:00 -0500

As I go through life, I see naturally recurring cycles. Ideas, concepts, music tastes and even foods fall in and out of favor. (I’m still waiting for disco to make a comeback so I can bust out my hustle.) Similarly, every four or five years, the conversation about supply chain and sales and operations planning (S&OP) metrics circles around, creating a brief flurry of activity. Someone will write a book about why metrics matter, trade magazines will publish articles about balanced scorecards, and the conversation and interest reach a peak. Almost like the cycle of cicadas, there is a lot of chirping for a moment, then the interest seems to end as quickly as it arrived. I suspect the buzz about metrics is short-lived because the paradigm rarely changes.

Just so there is no misunderstanding, I support metrics. Frankly, I believe the more metrics, the better. For decades, I have witnessed the positive correlations among measurement, organizational change and operational improvement. Yet substantive discussion about the importance of metrics to the S&OP process often gets lost in intellectual debates about naming conventions or never-ending attempts to expand the process model.

If forced to cite the typical S&OP metrics, forecast error, production performance, and inventory value or turns percolate to the top of my head. These all are meaningful measures — unless your company doesn’t produce anything, store inventory or have visibility to the end customer. However, after all my years managing S&OP processes, my key learning is that metrics should not conform to some arbitrary standard. They need to be tailored to fit the needs of the organization.

That said, there is one measure that I believe you absolutely must have.

Recently, at an ASCM conference in Chicago, someone asked, “If you had to use only one S&OP metric, which would you choose?”

To me this is akin to picking a favorite child; you love them all, but for different reasons. Yet my answer was surprisingly simple, “The customer’s measure of my organization’s performance.”

I went on to explain: “Our largest customer is Walmart, which gauges our performance based on an on-time-in-full (OTIF) metric. I love this measure. The ‘in full’ portion is a reflection of our ability to plan, while ‘on time’ is a reflection of our ability to execute.

“I will add that many organizations stop measuring their performance at the time of shipment. That is, they measure if they shipped a product OTIF, yet this does not account for all the logistics involved in actually completing the delivery of an order to a customer’s receiving dock. This is why I believe the best measure of total supply chain performance is perfectly captured in Walmart’s OTIF measure. And it is our primary S&OP measure at Combe.”

“But what about all your other customers?” was the response.

A fair question, to which I answered, “We are egalitarian in our fulfillment process; all customers are treated equally. More importantly, we use the exact same standard operating procedures for all our accounts, so Walmart’s measure is a representative analog for everyone else.”

THE CUSTOMER IS PARAMOUNT

I always have a slight pang of regret after delivering such a strong opinion, sort of like buyer’s remorse. My mind immediately beings to race. Was I correct? But, looking back at my conference encounter, I believe my initial answer was spot on. If we do not perform to customer expectations, they will drop us as a vendor or delist some of our products, and the organization will begin a slow spiral downward.

Of course, no S&OP process pivots on a solitary measure. Still, it might be beneficial to look through the lens of your customers and select or enhance metrics for each S&OP review meeting that will enable or contribute to the best results in a customer-based measure. Maybe go as far as presenting them during each review meeting as a reminder to focus on the importance of your customers’ interests throughout the entire S&OP process.

5 Creative Ways to Tackle the Truck Driver Shortage

Thu, 25 Apr 2019 00:00:00 -0500

Marketing brings to mind campaigns that build brands, hone customer awareness and increase sales. But for transportation companies, targeted marketing has strong potential to create a completely different outcome — identifying and engaging prospective truck drivers. As drivers continue to leave the industry in droves, logistics companies are facing drastic shortages, salary increases not commensurate with inflation trends, and threats to their very business models. Effective targeting and recruitment of drivers must become a priority.

While both freight and drivers have been scarce at various points throughout the history of the industry, the current lack of drivers is exceptional, to say the least. With a 50,000-plus driver shortage, according to the National Trucking Association, freight is waiting far longer to be transported than was the case just a couple of years ago. Costs are rising — in particular, labor costs — as companies feel growing supply chain pressures. With historically high turnover, veteran drivers aging out of the workforce, and high demand all coalescing, the driver shortage won’t clear up in the near future.

When a company can’t effectively move freight, this damages established relationships with customers and the ability to attract potential new ones. It also creates several financial and operational issues, such as increased workload for human resources departments and additional spending on hiring outreach. In the case of companies that offer subsidized driver training, there’s increased spending to replenish the pool of talent. There are also some serious and potentially costly consequences in terms of safety, compliance and risk management. Even drivers who make it through a training program might be unable to handle the demands and complexity of the specific job or associated safety protocols. Failures here can result in millions of dollars of fines, risk and payouts due to infractions or accidents.

The following are some proven strategies to help transportation and logistics companies address the driver shortage, stay competitive and build a sustainable advantage:

At a high level, transportation companies need to consider many factors when recruiting new drivers, as interests, preferences, priorities and needs vary quite a bit from previous generations. As older drivers exit the workforce, the methods that attracted them may no longer be effective. While pay is always a significant factor, it’s far from the only thing that can convince a newly trained driver — or an untrained person interested in learning the trade — to commit to working for your company.
Work-life balance is a very important consideration, particularly for millennials, so offering positions with a significant amount of time at home will help ease the burden of forever being on the road.
Adjusting the amenities and perks offered to drivers is another proven strategy. While it may seem minor, a change from in-cab satellite TV to streaming services such as Netflix or Hulu on tablets and mobile Wi-Fi can enhance the appeal.
Data analytics platforms and tools can transform hiring, just as they’ve created significant improvements for everything from operational efficiency to customer engagement. Identifying, quantifying and analyzing the campaign that attracted a driver — as well as their progress, performance and risk factors — can provide valuable insights into which efforts are working. Earlier upstream data analysis can improve retention, utilization, risk and efficiency. Data analytics also allow companies to derive an optimal cost-per-mile metric that finds the sweet spot between driver compensation and other cost drivers.
Search engine optimization (SEO) is another factor to consider. Tracking metrics such as click-through rate, hit rates on job boards and conversions can help businesses develop a better understanding of where high-value recruits come from. Moreover, predictive analytics can shed light on how to identify prospects by leveraging valuable investment dollars to ensure the best return on investment.

Transportation and logistics companies that have the solutions in place to identify strong driver prospects enjoy a variety of benefits. From better conversion rates to better company cultures to longer driver tenures to the achievement of key financial metrics, there's a lot to consider. In terms of financial metrics, specifically, effective recruitment identifies safer and more reliable drivers, which limits costs tied to insurance-based claims, improves utilization and mitigates damaging litigation. Business leaders must recognize the seriousness of the situation and make creative adjustments that allow them to be more competitive and successful in their recruitment and retention efforts.

Unique Logistics, Sweet Deliveries

Wed, 24 Apr 2019 00:00:00 -0500

Most of us cringe when vendors show up at our front steps. We crack open the door begrudgingly or even pretend we aren’t home. However, those of us in the United States are eagerly awaiting the sound of the doorbell these days. It’s that wonderful time of year when door-to-door salespeople become welcome guests: Girl Scout cookie season.

Girl Scout cookies got their start in the home kitchens of a handful of scouts back in 1917. Just a few years later, the official Girl Scouts magazine published a recipe for a basic sugar cookie. Its author estimated the cost of ingredients for six dozen cookies to be 26-36 cents and suggested troops sell a single dozen for 25-30 cents. Enthusiasm for the confection grew quickly, and by 1937, 125 councils were holding sales.

Today’s numbers are a bit more impressive:

The Girl Scout Cookie program is the largest girl-led business in the world.
Thin Mints are the most popular variety, with 50 million boxes sold each year, followed by Samoas and Tagalongs. (I’m a Trefoil man, myself.)
And nearly $800 million worth of cookies are sold each season — or 200 million boxes.

“That means a logistical push to deliver 200 million boxes of cookies across the country in four months managed by moms, dads and little girls,” writes Jennifer Smith in The Wall Street Journal. “In the cookie sale’s final weeks, scout leaders and parents hustling to move product are flying suitcases of cookies across Alaska and orchestrating cross-state handoffs outside Yellowstone National Park.”

She goes on to explain that, although cookies ordered through the more modern “Digital Cookie platform” can be shipped through the mail, 95% are still sold and delivered in person.

Sue Wilkins, a cookie-logistics volunteer from South San Jose, California, told the Journal: “When my first [delivery] comes … I have 10 full pallets in my garage. A semi comes and takes up the whole side of the street.”

Another volunteer in Fort Wayne equipped a 1,500-square-foot office with concrete flooring and a receiving dock to be able to accept shipments. The council there serves areas in both Indiana and Michigan, distributing about 5,000 boxes each day of cookie season.

Deliver

Just like those dedicated Girl Scout volunteers, skilled logistics, transportation and distribution professionals enable their supply chains to delight customers. The Deliver learning path at ASCM 2019, September 16-18 in Las Vegas, explores key delivery-related topics, including warehousing and finished inventories; scheduling, pick, pack, shipment and invoicing; and import and export tactics. Educational sessions on this learning path will feature last-mile emerging tech, global logistics outsourcing, dangerous goods and hazardous materials in the supply chain, and much more.

I invite you to register today and enjoy a $700 savings on three information-packed days of supply chain education, facility tours and networking. With a forward-thinking, dynamic lineup of supply chain business leaders and innovators, ASCM 2019 is sure to elevate your career and organization.

10 Strategies for Writing a Winning Awards Entry

Wed, 24 Apr 2019 00:00:00 -0500

The 2020 ASCM Awards of Excellence deadline is fast-approaching, so I thought it would be useful to reshare a blog I wrote last year, which includes 10 tips on what really makes an entry stand out. To do so, I first asked our judges what they’re looking for. Then, to get the inside scoop, I spoke with two-time winner Michael Morand, CPIM-F, CSCP-F, CLTD-F, senior manager of supply chain at Johnson & Johnson.

Following are 10 things to keep in mind when completing your award entries:

Follow the directions. Read instructions carefully, and create targeted responses. Make it simple for our judges to understand why you deserve the win. Address the criteria point by point, and be sure any required documents and images are uploaded in the proper format.
Give yourself enough time. Writing an effective entry often takes longer than you think. It’s critical to approach things strategically. For Morand, the process was iterative, taking 4-6 hours in total to complete. “Prospective submitters and candidates should give themselves several weeks to finish an initial draft, solicit feedback and quantify any results,” he advises.
Solicit feedback. Although it’s probably best to have one person in charge of the actual submission process, crowdsourcing ideas for what and whom to nominate and the supporting evidence to be provided is essential. Morand notes that he budgeted extra time to hear from teammates and sponsors in order to ensure the inclusion, and accuracy, of key entry elements.
Showcase your most successful initiatives and individuals. When choosing what to submit, focus on what will impress the judges most. Compare initial objectives with results, and always try to be as objective as possible. It’s a good idea to involve the people who worked directly on the project or those whom you plan to nominate. “For both of our entries, there was a strong focus on the results my teams have delivered for our various partners and customers,” Morand says. “There was also a focus on demonstrating a certain consistency and sustained effort over time, as opposed to focusing solely on isolated events.”
Use supporting evidence to reinforce your claims. Providing context, background, facts and figures validates your entry with our judges. If you include charts and tables, be sure to explain what they represent. “For the education-focused award, I was eager to document and celebrate the contributions of our lean program all-volunteer team that has made a tremendous difference in the development and success of many of our colleagues,” Morand says. “Between the content development, training, coaching, and all the other activities that our team had led and invested their efforts in, there were a number of efforts and tangible results to highlight, which made writing the entry and highlighting the team’s efforts easy!”
Avoid PR speak, jargon and acronyms. Be honest, direct and clear. Don’t assume that the judges will understand the industry terms you commonly use. Keeping your language simple will make your entry easier to read and digest.
Be persuasive and passionate. Write in a way that demonstrates your own enthusiasm for the initiative or individual you are nominating. Use compelling words and an active voice. If you’re excited about it, chances are our judges will be too.
Watch the word count. Our judges have a lot of reading to do; sometimes, the package I send for their review equals the page count of a few novels. Making their lives a little easier can only reflect positively on your submission. Get to the point, include only relevant information, and always remember that less truly is more.
Read, and read again. After you put together your submission, get it in front of the talented writers and editors at your organization. A fresh pair of eyes helps ensure the copy flows well, eliminate typos or grammatical errors, and fix anything that is unclear or superfluous.
Go for it! “When a colleague recommend I apply, I was a bit hesitant at first,” Morand admits. “But I also felt that it was a good opportunity to reflect on my career to date. After drafting the writeup and reviewing it with a longtime mentor, I felt a tremendous sense of fulfillment from the exercise and was grateful for the opportunity — win or lose.”

The ASCM Awards of Excellence are for corporations and individuals demonstrating superior performance and dedication to advancing the field of supply chain management. The deadline is May 31, 2020. Submit or nominate today!

Supply Chain Cybercriminals Get Creative

Fri, 19 Apr 2019 00:00:00 -0500

As supply chains become longer, more dependent and extraordinarily complex, cybercriminals are finding alarmingly innovative ways to attack them — and these strikes often trickle down to business partners, processes, information technology (IT) and equipment. Taylor Armerding writes in a recent Forbes article that attackers are increasingly aiming to leverage the relationships among supply chain stakeholders in order to breach every facet of the primary victim’s network.

“A full understanding of the sources of a given information system can be extremely complex,” Gregory Wilshusen, director of information security for the Government Accountability Office, recently testified to U.S. Congress. “The identity of each product or service provider may not be visible to others in the supply chain.”

Furthermore, according to the 2019 Global Incident Response Threat Report from cybersecurity firm Carbon Black, a growing number of attackers are using counter-incident-response techniques, such as deactivating firewalls, disabling antivirus software or deleting logs.

Armerding admits that supply chain has been “a prime attack surface for years” — the disastrous incidents at Best Buy, Delta Airlines, Sears and Target being just a few examples. However, the internet of things and the swelling number of online access points today are making it ever more crucial for networks to advance their supply chain risk management (SCRM) initiatives radically and right away.

“That means knowing who is designing, manufacturing, building, delivering and supporting your enterprise IT capabilities,” Armerding advises.

Ahead of the curve

While there is no guaranteed way to prevent cyberattacks, a well-managed supply chain makes it a lot tougher for the aggressors to succeed. Whether an organization is facing cybercrime, extreme weather, resource scarcity or a health epidemic, becoming more resilient enables supply chain management professionals to overcome such disruptions.

With this kind of resilience in mind, ASCM has engaged a group of SCRM subject-matter experts in order to become the voice of record in supply chain risk and resilience. They will soon be launching a survey focused on the financial impacts of a risk event on both company and shareholder value, as well as how risk may increase or decrease as a result of adopting new technologies and what kind of returns on investment are observed. Stay tuned for key findings and insights from this initiative.

ASCM’s Risk Management Education Certificate is another way to cultivate effective SCRM strategies at your organization. This comprehensive, forward-looking program prepares you to protect your company while balancing decision-making risks and rewards. The certificate is composed of risk-management basics; assessments; governance, risk and compliance; and more. You may earn certificate hours through several different ASCM seminars and at ASCM 2019 later this year in Las Vegas. I encourage you to take this essential first step toward safeguarding your company and its valued partners.

Accelerating Supply Chains with the Internet of Things

Wed, 17 Apr 2019 00:00:00 -0500

Connected cars, machines, wearables, home appliances and other consumer electronics comprise the internet of things (IOT). These innovations are on the brink of surpassing mobile phones as the largest category of connected devices. As sensors continue to fall in price and device networks become commonplace, information technology (IT) professionals should expect to be managing thousands of these endpoints any day now.

The key question, though, is: To what end? It’s easy to scatter sensors everywhere, but when running a line of business, how can supply chain management help make sense of all the sensors? To answer this question, just think of what you do at home. When people use the IOT in our personal lives, our goals are straightforward. We want to connect to our home and make everyday tasks simple, secure and productive.

For supply chain professionals using the industrial IOT, the goals should be essentially the same: Connect to the supply chain and make everyday tasks simple, secure and productive. The sooner these objectives are achieved, the sooner mobility and IOT will transition from nice-to-have to business-critical.

Supply chain managers are both business professionals and customers, so our expectations are shaped by our experiences in both worlds. For example, when you order at home from Amazon, you expect lightning-fast speed, complete visibility and no surprises. Your customers are becoming accustomed to this experience too; it’s what they expect when working with you as well. After all, why should your supply chain be any less advanced and user-friendly than a retail website?

With sky-high customer expectations, the only way to succeed is to work the way Amazon does: with mobile technology and the IOT embedded across the entire supply chain.

SLEEPY TODDLERS, SLEEPY TRUCKERS

A major reason people use the IOT at home is for safety. For instance, countless households have an IOT device to monitor their children. Smart home technology tells us when something is wrong and if we need to take action to make things better. That same idea equally applies to logistics. Companies have a responsibility to make sure their people are safe — especially truckers, who face demanding jobs with long hours on dark roads. It’s now possible to outfit truck drivers with IOT devices that detect if they are falling asleep. If this occurs, an alarm sounds and lights flash to wake up the driver and avert a potential disaster. This protects both the driver and the company.

AIR CONDITIONING, AUTOMOTIVE CONDITION

Home technology is also about optimizing the performance and durability of the household. Independent studies have shown that Google’s Nest Learning Thermostat saves people an average of 10-12 percent on heating bills and 15 percent on cooling bills. In under two years, it can pay for itself. In the same way, modern logistics companies know there’s money to be saved by optimizing their entire fleet. Trucks can be outfitted with sensors that reveal how well drivers are handling the rigs and if they are obeying speed limits. Monitoring trucks for excessive sudden braking is also a good idea, as it might suggest that a driver needs coaching to avoid accidents and needless wear and tear. And nearly all of today’s trucks have on-board diagnostics ports that capture a wide range of data, including speed, emissions and tire pressure.

BEGIN WITH THE WHY

As important as the technology is, it’s never the right place to start. Modernizing a supply chain rarely succeeds when buyers invest in a lot of hardware without having thought through the business requirements. Here, too, approach smart supply chain technology the way you would smart home technology.

What are the problems you’re trying to solve or opportunities you’re hoping to pursue with the industrial IOT? Why are those the most urgent to consider? If you’re uncertain what the problem is, it will be tough to know if and when you solve it.

Proof of concept must come first. Households that run on Google Home don’t start by blanketing every inch of the residence with devices. They start small, see what works best within the particular environment and then add only the technology they really need. The longer your supply chain, the more insights you will find by collecting and sharing data across it. As you consider your smart supply chain strategy, remember that nearly every device will exchange and update data with others. This is all the more reason to do proof of concept first: so that you know, from real-world experience, what those devices and data exchanges should be.

YOUR IOT PARTNER

When selecting a provider, it is important to begin by thinking through your specific business demands and use cases and evaluating how your needs are likely to change. (See Table 1.) Look for IOT partners that offer an integrated suite of solutions built to manage both mobility and IOT. Be wary of solutions that were cobbled together through a series of acquisitions. These often have gaps that reveal themselves over time.

Also essential is a proven methodology for shrinking the cost, complexity and downtime of developing and deploying apps, as well as managing business-critical endpoints. Effective providers use analytics and insight to give your IOT network the stability to deliver on mission-critical needs every day and the flexibility to adapt, grow and improve.

Just as smart home technology is vulnerable to being hacked, so is the industrial IOT. Be sure to select a partner that can manage and secure your devices and endpoints remotely. Because roughly 80 percent of those devices will be running Linux, those partners also should have a long track record of managing large, fast-growing ecosystems of different Linux distributions on a wide range of Linux-based devices and keeping Linux devices running trouble-free. Enterprise mobility management vendors with a sophisticated understanding and strong offerings around Android also will be a significant step ahead of the rest of the pack — especially when it comes to managing the fast-approaching future.

Finally, there is one significant difference between smart home technology and supply chain technology: A supply chain is a lot rougher on technology than a comfortable home. Look for providers that enable ruggedized devices that can stand up to life on the road, not just in the living room.

EXPAND YOUR THINKING

It’s difficult to imagine a single point along the supply chain that doesn’t benefit from being connected and coordinated with the network. For instance, many manufacturing firms have started to deploy smart sensors in their factories for predictive equipment maintenance. Instead of spending more for labor or losing revenue when things break down, the IOT enables the proactive identification of issues before they become major problems. And factories that employ proactive maintenance produce more than factories that are maintained only when things go wrong.

For example, in retail, the IOT is being used at virtually all stages of the product journey. This starts with optimizing the supply chain and using analytics to ensure the right products are in the right place at the right time, while enabling brands to transform the in-store experience and connect with shoppers in a more personal way.

Supply chain once was considered a business of simply moving things from one place to another. Today, it must be viewed as a data business. The ability to transfer and update information at every touchpoint is an indispensable core competency. The most successful companies in the world are racing to modernize their supply chains and make them smarter. If your company isn’t already on that journey, start now.

How Novartis Heightened Business Performance

Fri, 12 Apr 2019 00:00:00 -0500

With headquarters in Basel, Switzerland, Novartis has a global reach of approximately 129,000 associates worldwide and sells products in 155 countries. The company offers a diversified portfolio consisting of medicines, generic and biosimilar pharmaceuticals, and eye care.

The Novartis supply network for the Innovative Medicines division is composed of 16 sites. Not long ago, on-time-in-full delivery reliability was 40 percent, with about 400 stock keeping units (SKUs) out of stock from a total portfolio of 10,000 SKUs. This, in turn, led to a 97 percent customer service level, which impaired patient access to medicines and damaged business performance. Trust eroded between commercial and supply operations — each blaming the other for poor forecasting or undependable supply. Functional silos were common and firefighting was the norm.

“People had lost connection to how the supply chain was designed to operate,” says Ian Anderson, Novartis Operational Standards for Supply Chain Excellence global program head. “Planning competencies had degraded, leading to the supply chain becoming more reactive.”

Novartis leaders responded by committing to a transformation project that would improve operating efficiency and enable higher levels of service. The primary program goals were to ensure patients always have access to medicines and maximize business success. Decision-makers based the transformation on APICS Certified in Production and Inventory Management (CPIM) education. In the end, this initiative was so successful that it was honored with the 2018 APICS Award of Excellence — Transformation.

In addition to CPIM courses taught to reinforce learning and education on-site, core CPIM principles were adapted to the specific needs of the Novartis business and documented in a set of internal standards: Novartis Operational Standards for Supply Chain Excellence (NOSSCE). The processes were defined in a manual and measured via 23 key-performance indicators (KPIs). In addition, Novartis created a checklist to help each site measure progress against the defined standards.

“APICS CPIM is a foundation to gain a common understanding and a common language about how a supply chain is designed to operate,” Anderson explains. “This is so important; it is vital that people understand the supply chain theory and then use this knowledge to implement sustainable processes in each local business unit.”

Initially, external consultants were employed to work with each site. Later, an internal NOSSCE global team took over. The role of the team members was to educate and coach site employees on NOSSCE. A local organization at each of the 16 sites drove the transformation. This constituted a fulltime NOSSCE leader reporting to the site head and eight-to-10 part-time work stream leaders. Each work stream was sponsored by a leadership team member and populated by part-time subject-matter experts. The objective was to directly involve nearly 10 percent of the site population.

Best-in-class companies were benchmarked directly, through consultants or the experiences of Novartis employees who had worked in these organizations. In addition, a blueprint was created for all critical roles and documented in the NOSSCE manual. Implementation was mandatory.

“The powerhouse in the transformation was the people at each site who embarked on their NOSSCE program,” Anderson says, adding that site leadership teams experienced a day-long education program to identify how the NOSSCE transformation would integrate with site strategy. Then, each site leadership team determined its particular target benefits, which were typically related to supply reliability, lead times, inventory and operating efficiency.

Sites reported to a senior management governance committee each month on implementation progress, KPIs and process status. Along the way, one important discovery was that advancement was totally dependent on leadership commitment. Anderson says the initial top-down, senior management mandate was essential, but individual site leadership team commitment was paramount: “We learned that we needed to establish a deep belief, understanding and sense of purpose in the majority of site leadership team members,” he explains. “Without this, real and sustainable progress was impossible.”

A second key discovery was how difficult it was to define clear processes and appropriate KPIs in a large and diverse company with a variety of different business models. Anderson believes Novartis succeeded as a direct result of the NOSSCE process manual, metrics handbook, KPIs and checklist, which establish facts about process performance and take away a lot of the natural emotion and resistance that can come during any transformation.”

Lastly, Novartis supply chain professionals gained considerable knowledge by tackling some of the cultural challenges they faced during the implementation of the process indicators. “We had to work hard to focus people on root-cause analysis and systematic continuous improvement, rather than seeking a quick fix,” Anderson says. “The improved teamwork has definitely given staff a better quality of life. They have pride in what they do and are happy to work at Novartis. This has become a very strong factor — having a real sense of moving from survival mode to taking pride in doing a good job.”

A STRONG FOUNDATION

It is essential for Novartis to have data on how its supply chain processes perform. Andreas Eggmann, head of supply chain excellence, explains that there is a causeand- effect relationship between process performance and business outcomes because understanding and improving process performance is what leads to sustained business performance improvement.

“The NOSSCE program has successfully implemented our supply chain basics — our foundational stones — to bring a level of predictability and control to our supply chain,” Eggmann adds. “Now we will implement more advanced-planning capabilities, using more advanced-planning tools, to develop enhanced, end-to-end supply chain management with full scenario-planning capabilities and reduced lead times. We expect this will become a significant competitive advantage.”

Deadline to submit for the 2020 ASCM Awards of Excellence is May 31! Learn more about the categories and how to enter.

Sharing Supply Chain Stories

Fri, 12 Apr 2019 00:00:00 -0500

Last night, several ASCM board members, key women team members and I joined 130 remarkable women, who were recognized at the annual Women in Manufacturing STEP Ahead Awards gala. The 100 honorees and 30 emerging leaders embody excellence from the factory floor to the C-suite and — perhaps most importantly — are committed to mentoring and supporting the next generation of female talent.

For years now, ASCM has been a proud sponsor of this initiative, which aims to empower women; champion diversity; and promote STEP (science, technology, engineering and production) careers to women, veterans and younger generations.

“Nothing sends a more powerful message than your example,” Jay Timmons, president and CEO of the National Association of Manufacturers and chair of The Manufacturing Institute, told attendees. “Just by sharing your story, you show us what is possible.”

Indeed, envisioning the possibilities is essential as we continue seeking new and innovative ways to tap into this vast and powerful talent pool. “Manufacturers have an urgent need for new workers to join us,” Timmons continued. “Women are underrepresented in the industry, so there’s an incredible opportunity before us, and STEP Ahead is helping us seize it.”

Moving forward

Research by the APICS Supply Chain Council, Deloitte and The Manufacturing Institute reveals that executives around the world rank talent as the top driver of manufacturing competitiveness. Yet six out of 10 positions are currently unfilled due to the skills gap. Here in the United States, women total about 47% of the US labor force; earn more than half of all associate’s, bachelor’s and master’s degrees; and actively advance their careers, holding more than half of all managerial and professional positions. Yet they represent only 29% of the manufacturing workforce.

So, how can the global ASCM community engage, promote and retain women in supply chain? First, today is the final day to complete your application for the brand new ASCM Diversity and Inclusion (D&I) Taskforce. This will be a platform to increase the awareness and importance of D&I at every level of supply chain. I encourage you to add your voice to this essential initiative.

The Women in Supply Chain Forum at ASCM 2019 later this year in Las Vegas is another exciting opportunity. Supply chain diversity trailblazers will share their unique perspectives on workforce and leadership trends, as well as the future of the field. I hope you will join us for this inspiring panel discussion. The forum is open to all, and we at ASCM truly value the participation of everyone who supports the continuing advancement of women in the field. Visit ascmconference.org to learn more and register today.

Generative Design and Engineering Productivity

Mon, 08 Apr 2019 00:00:00 -0500

The market for software with generative design tools will expand at a compound annual growth rate of 24 percent, reaching $44.5 billion by 2030. According to a new report published by ABI Research, these sales include licenses and subscription revenues for computer-aided design (CAD) products with generative design tools or standalone generative design software products.

Generative design almost sounds like it can engineer superior products autonomously. The technology has not quite reached that level. But these solutions do help engineers create better designs faster, improve the shape of a component, and even create entire systems architectures with optimized electrical engineering. Generative design also enables the production of lighter, cheaper components while maintaining strength and solidity. Ultimately creating a higher-quality product, generative design generates the geometric shapes from an engineer’s requirements rather than changing existing shapes. Many iterations, variations or alternatives are made for engineers to compare, rather than simply removing unnecessary pieces or particles from one pre-existing design.

Three vendors (Autodesk, Dassault Systèmes and Siemens) have captured most of the early market share, but PTC recently acquired Frustum and will embed its entire solution into Creo as a kernel with native integration. Frustum currently only has a few thousand users of its own products, but Creo has hundreds of thousands, which will immediately place PTC among those other leaders. Dassault Systèmes came to market with generative design tools in its CATIA product, and several of Siemens products, including NX, NX Nastran, HEEDS, Capital, and Simcenter 3D, generate and validate designs in the context of constraints with a combination of artificial intelligence, rules-based algorithms and graphics processing.

The automotive industry represents the largest opportunity globally, with $18.5 billion in generative design software revenues forecast for 2030. In China, which will overtake the United States as the largest market, industrial machinery is the biggest opportunity, creating $5 billion in generative design software revenues in 2030. In France, aerospace and defense (A&D) leads the way. At first, generative design will grow with additive manufacturing in automotive and A&D, but, as more engineers start to use these tools, they will see that generative design has applications beyond additively manufactured parts.

For supply chain management professionals, the first step should be figuring out how generative design fits into an organization’s broader industry 4.0 strategy. Generative design provides the most value when paired with an internet of things platform and involves performance and production simulation software for feedback loops and manufacturability tests. It should also deeply integrate with product life cycle management (PLM) software.

Then, measure results for continuous improvement. No one can consistently improve without constructive feedback. Vendors of generative design tools should provide opportunities for users to compare older products with generatively designed products. They can do this by integrating with metrology and inspection equipment, PLM software, or IOT platforms. These comparisons are valuable for any variables that matter, such as weight, cost and overall performance.

Which APICS Certification is Right for You?

Mon, 08 Apr 2019 00:00:00 -0500

The question I’ve been asked most often, in my 25 years as an APICS volunteer and staff person, is “Which of the APICS Certifications is right for me?” APICS is recognized by corporations around the world as the premier provider of certifications in Operations Management, Supply Chain Management, and, now, Logistics, Transportation and Distribution Management, and it can be a little confusing determining which of our certifications will most help your career.

I always answer this question with questions of my own: “Where is your focus in your current career? And, where do you want to be in in your career over the next five years?”

Is your focus inside the four walls of your company, anything to do with planning, purchasing, inventory management, or scheduling the products or services that your company provides? Then the Certification in Production and Inventory Management (CPIM) will give you the tools and techniques you need to improve the efficiency of our company’s internal processes.

Is your focus outside the four walls of your company, anything to do with supply chain optimization, supplier or customer relationship management, the flows of information, money and materials between your company, your suppliers and customers? Then the Certified Supply Chain Professional (CSCP) designation will give you the knowledge of the end-to-end supply chain that you need to help your company make your supply chains more competitive and use your supply chains as strategic assets.

Is your focus on the storage and movement of the materials, components and finished goods that your company, or your clients, work with? Then the Certified in Logistics, Transportation and Distribution (CLTD) designation will give you the tools and techniques you need to improve the efficiency of your logistics and transportation capabilities and distribution and warehouse facilities and processes.

A certification validates your mastery of the body of knowledge covered by the certification you earn, and many companies require or prefer employees with one or more of the APICS Certifications.

For more information on which APICS certification is right for you, and the individual certifications, watch our recent webinar recording, and view the Q&A document that resulted from the live webinar.

The Supply Chain Secret Is Out

Thu, 04 Apr 2019 00:00:00 -0500

For those of us in the field, it’s no surprise that supply chain encourages innovation and generates high-paying, rewarding jobs. Thanks to a new joint research project by the Copenhagen Business School, Harvard Business School and Massachusetts Institute of Technology, the value of the supply chain economy is now evident to people of all backgrounds and disciplines.

“The research rethinks what academics and practitioners have simply called the supply chain — a loose federation of individual suppliers that feed companies with the goods and services necessary to create products,” writes Michael Blanding in “The Secret Life of Supply Chains.”

Blanding compares the study to archeologists digging on a remote hillside and asserts that the research has unearthed a source of jobs that are crucial to the ability to produce goods and services. It also reveals that supply chains jobs are the highest paying in the United States and the majority are focused on services, such as engineering, computer programming and design.

Importantly, the study bridges the typical manufacturing-services divide, clearly demonstrating how supply chain drives progress and advances careers. Researcher Karen Mills believes this is a revolutionary means of “categorizing the economy that recognizes the unique role of suppliers.”

Mills previously worked for the U.S. Small Business Administration in the Obama White House. While there, she noticed that most people were unaware of the myriad industries that encompass the sector and how many jobs supply chain creates. “If we want to continue to grow our economy and become innovative and spur creativity, we need to make sure we have the inputs, including the workforce,” Mills says. “Being sure that suppliers have access to the workers and the capital they need is good for everyone.”

Excavation tools

These findings make a strong argument for increased investment in supply chain education and training, which are made possible by the industry-leading APICS Certified in Production and Inventory Management (CPIM) professional development tools. I am reminded of last year’s winner of our Emerging Supply Chain Leader award, Hollie Elliott, CPIM. A materials manager at Leggett and Platt Automotive Group of North America, Elliott’s team describes her as an inspirational leader and mentor with crystal-clear vision, excellent communication skills and the ability to identify potential risks and plan accordingly. “This has resulted in numerous supply chain breakthroughs at our company,” her award nomination states.

The corporate front-runner in Education, Weir Group, also had CPIM at the heart of its winning initiative. Weir provided CPIM education for 120 employees from 24 different countries, which led directly to a 45% lead time reduction and 67% increase in orders. However, Mark Duncan, value chain excellence lead, believes the most valuable result was developing more capable people. “The CPIM participants used their learning to not only improve the supply chain in their location, but also educate others,” he says. “Consequently, many of them have taken on additional leadership roles.”

Best-in-class supply chain organizations around the world are choosing to support their employees’ CPIM journeys because these professionals add value, reduce costs, heighten customer satisfaction, and maximize returns on investment in systems and technologies. Furthermore, ASCM’s soon-to-be-released salary survey reveals that designees enjoy an average 30% increase in salary.

Bring to light the incredible value of supply chain: Discover what CPIM education and training can do for you and your business today.

4 Imminent Supply Chain Shakeups

Thu, 04 Apr 2019 00:00:00 -0500

With the gathering storms of trade wars, extreme and unpredictable weather conditions, a record-breaking driver shortage, and upended retail practices and customer expectations, there are clearly some momentous shifts coming our way. Supply chain professionals will need to be rethinking their networks, strategies and processes, with four areas in particular deserving our attention:

Supply chains will experience a global rebalancing. Irrespective of where trade agreements finally land, they will inevitably come with cost and service implications for most international corporations. We are already witnessing corporations facing resistance in their sales and manufacturing footprints in emerging markets — the poster child for this being technology products. Energy and chemicals giants are increasingly outsourcing to low-cost countries other than China. Automotive companies are being hit by higher raw material costs. This trend will require the optimization of supply chains around cost and service.
As an inevitable outcome of companies reevaluating their plan-make-source-deliver systems, we expect to see some possible relief in freight capacity. Most U.S.-based shippers had a tough year in 2018. As a result, they took a hit at maintaining customer service levels at budgeted costs. This year is likely to bring some relief and potentially stable or slightly lower contracted freight rates, driven by the trade war and the global economic slowdown. However, this is only part of the picture: Severe weather events and global warming have led to a whole new level of need to be ready for emergency conditions.
Disaster management will need substantial upgrades in competency. These have been unprecedented natural disasters of late: hurricanes, wildfires, earthquakes, tsunamis, an arctic vortex — the list goes on. While formal disaster recovery programs were typically seen only at a few multi-billion-dollar global corporations, soon more large and mid-cap companies will develop robust capabilities to better cope with supply chain disruptions.
With growing investments in technology, inventory management will move toward more accuracy, relevance and efficiency. Playing a key role in this, the digital supply chain will become more tangible and its benefits realized. The last five years have seen the phrase “digital supply chain” used with increasing frequency by experts in most supply chain circles. While there has been guarded skepticism around its practical applicability to supply chains, 2019 will see an increased degree of application of these digital concepts to supply chains. These will include demand planning and sensing with short cycle times to reduce inventory costs and improve service. We are also likely to experience more agile omnichannel distribution capabilities enabled by real-time asset tracking, as well as a rise in automated distribution centers and factories driven by robotics and 3D printing.

In all, expect the coming months to bring yet a new set of disruptions to global supply chains. With technology nipping at its heels, global warming rocking weather patterns, and geopolitical uncertainties unseating historical and strong alliances, supply chain will need a fundamental rethink.

Stop Pedaling and Start Navigating

Thu, 28 Mar 2019 00:00:00 -0500

When was the last time you sat down with your team to thoroughly review your supply chain organization’s progress and future direction? These days, some professionals are so busy that they fail to notice when they’re running to stand still. If most of the work you do involves decisions and activities that affect the next 30 days, then being reactive is your norm. Furthermore, you probably want to do everything yourself because trust is lacking, which may cause high levels of employee turnover.

The first step to being proactive and learning to let go and trust your team is plotting a longer-term course. Organizations that can balance short- and long-term demands conduct regular strategic sessions, meet frequently with their customers, visit other industries to learn best practices and invest in their employees. This requires thoughtful planning, market research, competitor analysis, forecasting, process improvement, business development, delegating and leading.

However, the most fundamental activity is articulating a vision. Vision is what future success looks like. It should be grand in scope — not next quarter or next year, but five or 10 years out. Generate a vision by having all stakeholders get together in a room and complete the sentence, “Our vision for XYZ Company is ________________,” by writing just one word on a sticky note. Then, collect the responses and group them into their natural categories. The power of the group generally captures the most relevant themes.

Once you’ve articulated your vision, try the approaches outlined in Figure 1. The lower levels are fundamental and easier to conduct. The higher levels are strategic and require more effort and discipline. You may complete some in tandem, but regardless of how you proceed, they are best performed in a team setting.

Start-stop-continue is a simple framework of what to start doing (because it will lead to improvements), what to stop doing (because it isn’t helping) and what to continue doing (because it’s working). To identify these items, have team members write down at least one response for each category on a sticky note, then, once again group them to detect consistent patterns.

Strengths, weaknesses, opportunities, threats (SWOT) analysis is a strategic planning technique for business competition or project planning. To perform a SWOT analysis, break up your team into four groups. Ask each the following questions:

Strengths: What do we do better than the competition?
Weaknesses: What do we need to improve upon?
Opportunities: What external factors can we capitalize on or use to our advantage?
Threats: What external factors could jeopardize our success?

Give each group 15 minutes to list responses. Then, add each group’s responses to the four quadrants on a large flip chart, as in Figure 2.

Current state versus future state uses several attributes to describe how an organization is currently operating versus how it might operate in the future. This tactic requires considerable knowledge about the company and is best performed with a cross-functional group consisting of marketing, sales, engineering, production, supply chain, customer support, finance, human resources and information technology. An outside facilitator is often useful to keep participants focused and to avoid bias as participants discuss

your products and services
focus, core expertise and comparative advantage
revenues, gross profits and net profits
customers, in terms of industry, revenue, number of employees, and whether the business is public or private and domestic or international
the geographies and markets in which your company operates
customer expectations
organizational structure
the extent to which processes are documented, followed and maintained
the extent to which data is captured, stored, reported and analyzed
company culture.

Business alignment starts with defining the organization’s goals. Goals are the key phases required to reach a vision, like the rungs on a ladder. They should be SMART (specific, measurable, achievable, relevant and timely). Next, design the appropriate strategies to realize those goals. Examples include product or service innovation, supply chain optimization, operational excellence, and customer retention. At this point, the team selects high potential areas on which to apply the strategies. The process ends with identifying the specific projects within those high potential areas. The beauty of the business alignment framework is that it pulls the right projects such that they align with the goals instead of pushing projects through the organization.

GET STARTED

It’s time to stop pedaling and start navigating. Don’t delay — take the first step today toward achieving that critical, yet so often elusive, balance between short- and longterm demands. The strategies presented here are a proven place to start.

S&OP and The Digital Supply Chain

Thu, 28 Mar 2019 00:00:00 -0500

Unfortunately, according to Gartner’s four-stage, higher-maturity, S&OP model, nearly 70 percent of companies are stuck operating in the reacting and anticipating phases. These areas are most often centered around making a plan and maintaining a regular S&OP meeting in order to balance supply with demand for the good of the enterprise. Consequently, they are totally focused on inward processes and tend to require at least four years to solidify.

To address the uncertainty, complexity and risk that come with global, digital supply chains, it’s time to make the jump to the more mature S&OP stages: collaborate and orchestrate. Collaboration involves expanding the S&OP process to a company’s suppliers and customers; orchestration describes a process that is driven by demand sensing and shaping, as well as enterprise trade-offs such as risk-reward analyses. In other words, the focus shifts to profitability.

DIGITAL LANDSCAPE

The present global, digital landscape is ominous. According to the “10 Key Marketing Trends For 2017” report from IBM Marketing Cloud, 90 percent of the data in the world today was created in the last two years alone, at 2.5 quintillion bytes of data a day! One quintillion bytes of data is equal to one billion gigabytes. That’s overwhelming enough. And yet, it will continue to grow into something even more astounding, called a yottabyte, in the next five years. A yottabyte is equal to one septillion, or a million raised to the seventh power, bytes. This is theoretically massive enough to fill one million datacenters and will cost $100 trillion — more than the combined gross domestic products of the entire world.

The best way to look at and better understand big data is to dissect it into four V’s: volume, variety, velocity and veracity. This breakdown helps clarify what big data is really all about:

Volume: Big data is increasing exponentially, both for people on a personal level and within our enterprises and supply chains.
Variety: Many new forms of data now exist. The information comes from computers, phones, photographs, texts, the internet, streaming video, sensors in everything and much more. Eight years ago, about 80 percent of all data was structured, similar to rows and columns in relational databases. That is the case no longer. Today, 80 percent of all data is unstructured, free-form chaos.
Velocity: The speed with which data is now passing through all of our devices is increasing exponentially. Most existing systems simply cannot handle the pace.
Veracity: In the new global, digital landscape, data is imprecise, amorphous and therefore must be vetted for reliability before it’s possible to use it to make informed and efficient decisions.

MAP TO MINIMIZE RISK

Because today’s networks have an escalating number of nodes, there’s a much higher probability of a risk event occurring. Supply chain visibility thus has become a critical part of top-notch execution and solid risk management. Visibility is key, and this is best achieved by digitally mapping supply chains.

To produce an effective map, start small with a product line maintaining a couple of stock keeping units. Graph suppliers, then plot manufacturing plants or contractors. Next, add distribution centers, followed by any warehouses — both the company’s and its customers’. Finally, map the customers themselves.

When the map is complete, connect the dots to display the flow of material. Next, use this information to identify risks that have occurred or might occur. Put the risks on the actual supply chain map, and assess them in order to determine the most impactful risk-mitigation strategy. At this point, it’s also possible to run what-if scenarios that can help evaluate how a supply chain will react to certain stimuli. This is known as stress testing.

MAKE THE JUMP

Big data, mapping and stress testing are a great place to start. However, to cope with mounting uncertainty, complexity and risk, additional resources are needed. Predictive analytics, probabilistic modeling, programming languages such as Python and R, the open-source software utility Apache Hadoop, and the open-source computing framework Apache Spark are some of the available tools supply chain management professionals should familiarize themselves with. (See sidebar.) These solutions enable users to

digitize their supply chains
better handle uncertainty
more effectively read and make sense of unstructured data
quantify how their supply chains will react to challenges
develop statistically strong patterns associated with supplier and customer buying habits and sentiments.

Perhaps most importantly, these exciting tools can successfully support the jump to the more mature, outside-in S&OP stages. Indeed, as they enable users across all kinds of networks to accelerate learnings and enhance the precision of next-generation decision-making, the face of S&OP will change dramatically — and a lot sooner than many professionals may think. And with more and more supply chain management professionals leveraging these tools and embracing next-generation S&OP, companies will benefit from progressing through the predictive analytics maturity model:

Phase 1: Descriptive (What happened?)
Phase 2: Predictive (What might happen next?)
Phase 3: Prescriptive (What should I do about it?)
Phase 4: Cognitive (The system learns.)

Along the way, the objective must be for supply chain management professionals and the networks they guide to become better positioned to master complex decisionmaking processes. As S&OP continues its dramatic shift — from a structured, linear tool to a more ad-hoc, event-driven process — it will be the ideal support mechanism for these strategic imperatives. Supply chain management professionals would be wise to maximize innovations that help them achieve high-frequency, high-impact decision-making and accelerated learnings across the enterprise.

THE S&OP INNOVATIONS TO WATCH

PREDICTIVE ANALYTICS involves mining information from data sets in order to identify useful patterns and forecast the likelihood of future events. As increased supply chain complexity puts pressure on even the most well-run S&OP processes, accurate demand planning via predictive analytics is a valuable advantage. Supply chain management professionals can benefit by using predictive analytics to analyze and consolidate data from all areas of the enterprise in order to make informed, effective, real-time decisions.
PROBABILISTIC MODELING involves statistical analysis of historical data in order to estimate the chance of an event occurring again. In S&OP, it makes it possible for supply chain management professionals to identify unknown risks and develop contingency plans.
PYTHON AND R are open-source programming languages. R is most often used to solve statistical problems, machine learning and data science. It also offers packages that enable users to perform time series analysis, panel data and data mining. Python offers a more wideranging, data science methodology. Both can meaningfully enhance the S&OP process.
APACHE HADOOP AND SPARK can process large data sets with simple programming models. These solutions can create more accurate analytic decisions in response to the internet of things, artificial intelligence, the cloud and mobile. Hadoop also helps users optimize enterprise data warehouses, drive better decision-making and cut costs by moving “cold” or siloed data to a data lake.

Hackers Help Eliminate Supply Chain Vulnerabilities at GM

Thu, 28 Mar 2019 00:00:00 -0500

THE CHALLENGE

General Motors (GM) designs, manufactures and distributes vehicles and vehicle parts. One of its specializations is technologically advanced cars, such as those with built-in 4G LTE connectivity, semi-autonomous vehicle and electric vehicles.

Nearly two years ago, GM leaders realized that the data limits of its OnStar Wi-Fi hotspot system could be hacked. The security flaw allowed anyone to exploit the system and take advantage of unlimited Wi-Fi. With more than 4 million cars equipped with this system, the consequences could have been massive.

“We’ve always approached security with a diverse set of tools in our toolbox,” says Jeff Massimilla, vice president of global cybersecurity at GM. “In today’s connected world, it’s critically important that product and corporate cybersecurity functions are aligned across all areas of the business.”

Early on, GM merged all cybersecurity activity — both product and corporate — into one central organization. But the cybersecurity team members realized they needed more help in identifying and resolving vulnerabilities within the supply chain than what the team could provide.

THE SOLUTION

HackerOne is a hacker-powered security platform that works with companies and organizations across all industries to set up vulnerability disclosure policies (VDPs) and bug bounty programs. When an organization implements a public VDP, this means they’re open to any security researchers hacking their system and alerting them of any flaws uncovered. HackerOne uses ethical hackers and security researchers from all around the world to find security flaws within security systems.

GM implemented a public VDP through HackerOne. The goal was to allow hackers to safely and legally report security threats and vulnerabilities within GM’s supply chain. External hackers can submit threats in GM’s systems through its VDP. Once they do so, the internal GM security team responds immediately to fix the problem.

The global community of friendly hackers brings diverse perspectives and techniques that can identity vulnerabilities quickly. GM is an example of an innovative company embracing the hacker community to surface bugs and supplement the great work their internal security team is already doing.

THE RESULTS

Since the program launched in 2016, GM has resolved more than 700 vulnerabilities across its entire supply chain, thanks to the help of more than 500 hackers. The security improvements extend to key suppliers and other external partners, making it one of the most comprehensive VDPs in any industry.

“Leveraging HackerOne’s relationship with the research community and seeing firsthand the results they provide has been extremely encouraging,” Massimilla says. “Hackers have become an essential part of our security ecosystem.”

ASCM Seeks Volunteers for New Diversity and Inclusion Taskforce

Fri, 22 Mar 2019 00:00:00 -0500

The majority of people credit diversity and inclusion (D&I) programs with boosting both innovation and employee retention at their companies, according to an executive survey by global consulting firm Korn Ferry. Nevertheless, 59 percent of respondents say they still experience unconscious bias, which is defined as forming social stereotypes about certain groups outside of our conscious awareness.

“Progress is being made to create a culture of [D&I] in organizations, but much more needs to be done,” urges Andrés Tapia, Korn Ferry global D&I strategist. “Organizations need to address the structural issues that are keeping bias alive, including pay parity, role expectations and high-potential talent criteria that favor one group over another.”

There are some notable companies working toward these goals:

Microsoft is hiring people who are neurodiverse, meaning they have differences such as attention deficit hyperactivity disorder, autistic spectrum disorder, dyslexia or Tourette’s syndrome.
Pfizer Inc. added an inclusion index to its annual engagement survey that reveals areas where workforce groups are feeling excluded so that the business can address those situations.
Goldman Sachs and PayPal are bringing back to the workforce women who have taken career breaks.
PepsiCo has real-time data on race, gender, age, and promotion and retention rates for all 260,000 of its employees in order to determine where to focus improvement efforts.
Ingersoll Rand is prioritizing the advancement of women, having pledged to bring gender parity to its corporate leadership structure by 2030.
DowDupont embeds D&I metrics into its overall corporate scorecard as a component of a holistic, global strategy.

These and countless other organizations today recognize the importance of advancing their D&I initiatives for a multitude of reasons. Diverse and inclusive businesses are better able to attract, develop and retain top talent in order to drive long-term success; enhance the customer experience; and make better decisions. Furthermore, McKinsey & Company reports that businesses in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians; those in the top quartile for gender diversity are 15 percent more likely to have greater financial returns.

“The case for diversity improving the bottom line is well-documented,” write Rashi Dubey and Arlene S. Hirsch, for the Society for Human Resource Management. “The ability to innovate successfully depends on applying the broadest set of perspectives to business challenges.” The authors encourage organizations to embrace D&I so that their workforces may be infused with fresh perspectives, problems are examined from all perspectives, and assumptions are always questioned in order to protect the businesses from groupthink and “the plague of complacency.”

Call for volunteers

ASCM is committed to fostering professional environments that value equality and individual differences. One way we are doing this is by partnering with Korn Ferry, which transforms organizations by helping them hire the right people into productive roles and develops individuals through Korn Ferry Advance. The services provide job seekers of all profiles and backgrounds the expertise they need to succeed in supply chain careers. ASCM members enjoy exclusive discounts on resume review, career coaching, traits assessments, interview preparation and more.

In addition, the brand new ASCM D&I Taskforce will be a platform to increase the awareness and importance of D&I at every level of supply chain. I invite you to take part in this exciting opportunity. To be considered for a position on the taskforce, complete your application by April 12, 2019.

The Business Case for Empowered Women

Fri, 15 Mar 2019 00:00:00 -0500

There are approximately 190 million women working in supply chains around the world today. The jobs they hold assembling products on factory floors, packing cartons in warehouses, and harvesting crops in farm fields should translate to economic independence and a brighter future for their families. Regrettably, that is too often not the case.

According to workers’ rights alliance the Ethical Trading Initiative (ETI), the reality for countless women is excessive hours, often spent in dangerous working conditions, and wages that are insufficient to make ends meet. Further, “the power imbalance” between male supervisors and a predominantly female workforce, compounded by what society accepts as appropriate work for women, means they end up in the lowest paid, least secure roles.

The recently published case study “The Benefits of Collective Bargaining for Women” explores a landmark agreement for Moroccan rural workers, particularly women. The report states: “The lowest-paid workers labor in informal economy jobs such as agriculture, where the reach of national labor laws and regulations is poor at best, resulting in frequent and ongoing violations of worker rights. Workers often are forced to work long hours, are paid less than the minimum wage, and rarely receive retirement or other benefits they are guaranteed under national law. This is especially true for women who are typically the most precarious and lowest-paid agricultural workers in many value chains and who are especially subject to sexual harassment and other forms of gender-based violence at work.”

But as a direct result of women being at the bargaining table, the agreement between the Moroccan Confédération Démocratique du Travail and Domaines Brahim Zniber Diana Holding Group succeeded in giving women equal pay for equal work; protecting them from being fired when they marry; and providing them with training for higher-paid positions, something previously only offered to men. Other key gains include maternity and paternity leave, time off to care for sick children, and more transparency into overtime and bonuses.

Importantly, the Morocco Ministry for Labor has praised the agreement, citing its exemplary negotiation process and farsighted vision of cooperation.

Gender equality is good for business

Having women behind the closed doors of a negotiation was clearly an effective strategy. In the same way, having women represented in all levels of supply chain is crucial. Although gender equality is widely recognized as critical to heightened productivity, less turnover and healthier work environments, it continues to be a complex issue for today’s supply chains. This is why the Association for Supply Chain Management (ASCM) is dedicated to making a positive impact on vulnerable workers everywhere.

ASCM is the recipient of a three-year grant from the Bill & Melinda Gates Foundation. Through this grant, we will work to directly support the Foundation in its efforts to build self-reliant supply chain talent, increase educational and economic opportunities for women, and encourage healthier families and communities. I invite you to learn more and get involved. As more and more cases like the Moroccan victory proves, these goals are achievable.

Steer Clear of these Five Innovation Killers

Mon, 11 Mar 2019 00:00:00 -0500

Innovation is difficult to come by. It is a fleeting concept that eludes most companies. In fact, experts say the odds of a new product idea reaching full commercialization are less than four percent. That said, innovation is difficult, but not impossible. Chances are, if your organization is struggling to innovate, you’re doing one or more of the following:

1. You don’t make innovation a top priority and an all-hands-on-deck job requirement. Many CEOs want innovation but only after the “real work” gets done. Here’s a news flash: If you want to survive, you had better make innovation the real work. Make it a top priority for everyone in the company, not just the engineering department. Write it into every job description, and reward and recognize people who take innovation seriously.

2. Your company doesn’t give people the training they need to innovate. When you make everyone responsible for innovation, it can be scary. People will be afraid that they aren’t up to the job because they are not creative. But studies have debunked the myth that you’re either born an Einstein or you’re not. The truth is everyone can be creative if they are trained in the principles of creativity. Train every single employee on how to generate new and novel ideas. Seek help from the outside if you are unsure of how to do this. My company recently hired the chief creativity officer from QVC to show our workforce how it’s done.

3. You don’t give people the time to innovate. Employees are going to naturally default to the tasks at hand: making the widgets. After all, they get paid to make the widgets. They are comfortable making the widgets. Unless you give them permission to do otherwise, that is all they will do. I tell my employees that I expect 20 percent of their time to be spent on innovation. And I hire extra people so the widgets still get made.

4. Your organization doesn’t give people a place to innovate. At my company, we built a place specifically for innovation. Our employees named it the Creation Station. Everyone is welcome to gather there whenever they want to collaborate in the pursuit of new products or processes. Some people will tell you such a space is a waste of money and it has no return on investment (ROI), but I can tell you that our Creation Station has returned orders of magnitude in ROI with new products and improved internal processes. Other critics may say that building such a space only gives employees the excuse to goof off there. To that I respond, “It sounds like you have the wrong employees. Get the right ones.”

5. You don’t take risks to innovate. The world of innovation is murky and uncertain. You must give people permission to fail. I tell CEOs all the time: Don’t take risks; take big risks. Little risks have puny returns. Little risks don’t motivate people to do extraordinary things. Get comfortable with being uncomfortable. Take the big risks and encourage your employees to do the same. And if they take a risk and fail, celebrate! Reinforce the “risk is a good thing” philosophy because that is the only way true innovation will happen.

Shifting Gears in Automotive

Fri, 08 Mar 2019 00:00:00 -0600

Everybody remembers their first car. Mine was an old Lincoln Continental with doors hinged at the rear, often referred to as “suicide doors,” which are apparently being brought back by the automaker. It was a behemoth of a car — barely getting nine miles per gallon, at a time when the United States was dealing with a gas price spike from 38 to 55 cents!

But times are changing. Increasingly, teenagers are choosing not to get a driver’s license at all. Likewise, more adults today are opting to forgo a car. Instead, they are living and working in big cities, enjoying the convenience and time savings of Uber, and electing to do their part to reduce planet-warming emissions. Even most automotive industry executives believe that a full 50 percent of current U.S. car owners will lose interest by 2025.

“The automobile — once both a badge of success and the most convenient conveyance between points A and B — is falling out of favor in cities around the world as ride-hailing and other new transportation options proliferate and concerns over gridlock and pollution spark a reevaluation of privately owned wheels,” write Keith Naughton and David Welch in Bloomberg Businessweek.

Automotive purchases aren’t just dwindling in the United States. Sales in Europe fell 8 percent in 2018; China experienced a 6 percent drop. According to Bloomberg, many analysts think the industry may never again reach record heights. The authors go on to say that “peak car” is a reflection that reurbanization and the widespread adoption of ride-sharing apps will lessen the need for many of the 1.3 billion vehicles now on the road: “With new cars increasingly expensive, but mostly used just a few hours a day, the financial case for alternatives is growing stronger.”

Indeed, vehicle expenses are the second-largest outlay for Americans, yet most cars are parked more than 90 percent of the time.

But car manufacturers are not losing hope. Instead, they are choosing to put more time and effort into disruptive services, such as autonomous vehicles (AVs) in the form of robo-taxis and other self-driving cars — and even forming some unlikely partnerships between “frenemies” along the way.

Other companies are partnering with ride-hailing businesses, focusing on both AVs and new vehicle types. As Uber-style services increase the total proportion of all trips taken in a car, manufacturers will need to meet demand for more vehicles that are that are clean, safe, reliable and comfortable for passengers.

Hit the road

Keeping up with complex and rapidly changing market dynamics will require considerable investments and unprecedented agility. Best-in-class sales and operations planning (S&OP) is a proven tool that today’s automotive manufacturers can use to enable greater collaboration, synchronize product unveilings and coordinate a successful response.

Now in its 12th year, the Best of the Best S&OP Conference this June in Chicago will be a global gathering of the brightest minds in the industry. Presented by ASCM and the Institute of Business Forecasting and Planning, educational sessions feature integrated-business-planning techniques; proven tools to manage and mitigate risk; and strategies for using S&OP to enhance new product launches. Whether you’ll be taking your own wheels or someone else’s, this event is well worth the trip.

The Red Queen Hypothesis

Fri, 01 Mar 2019 00:00:00 -0600

The Red Queen is a fictional character from Lewis Carroll’s Through the Looking Glass. In the book, the Red Queen explains to Alice that her world works differently: “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

The Red Queen hypothesis was coined in evolutionary biology to explain that a species must adapt and evolve not just for reproductive advantage, but also for survival because competing organisms also are evolving. It’s important to note that competing organisms can be friendly — for instance, those that rely on the same food sources.

Applied to our careers, we might think about adaptation and evolution as embracing change and pursuing continuous learning and development. In this realm, the imperative to evolve comes not from aspirational pursuits, such as a promotion, but from the need to continue providing value in an environment where even “running our fastest” might not be enough.

So, what’s keeping us from running faster, and, perhaps more importantly, why are managers sometimes ineffective at encouraging others to do so?

FAILURE TO MOVE

Adapting and evolving as a management practice can be remarkably difficult. To overcome the inherent challenges, we must keep in mind that change typically involves more than a documented update to an associate’s responsibilities and an expectation to reshape interactions with others. Rather, change can affect a person’s sense of value or belonging.

Change management often is taught through a commitment curve. The curve explains the stages of personal transition as an individual’s support of an organizational change increases over time and with exposure. The curve implies that a manager should identify an individual’s current stage and provide the requisite information to help this person reach the next level.

While the commitment curve might explain the markers and milestones of change management, it doesn’t provide much insight into the nuances of resistance, and managers should be cautious not to oversimplify this effort or underestimate its significance. For a more complete understanding of the factors associated with resistance, Shaul Oreg’s “Resistance to Change” in the 2003 Journal of Applied Psychology explains the common manifestations, which include

reluctance to lose control
an unwillingness to think differently
lack of psychological resilience when coping with change
intolerance of the adjustment period involved in change
a tendency to perform poorly outside the familiar framework
reluctance to give up old habits.

The central challenge for managers is how to encourage change, continuous learning and development. Given that shifting environments are uncertain by design — and associates are likely trying to understand how to make sense of these scenarios — it follows that individuals struggle with the idea of knowing if and how their actions will lead to successful outcomes.

Managers can help by sending clear signals that change is desirable, creativity is encouraged and failures are acceptable. It is imperative to understand the norms that the team has grown accustomed to within the organization and if any course-correction or compensation are needed to ensure the right actions are being shared and reinforced.

Managers also must account for the context not only at the individual and team levels, but also at the broader departmental or organizational levels. There may be a general willingness of an individual to embrace change and express creativity. But if there is a distinguished resistance to change in the team or broader organization, this will limit the amount of change that can be driven or supported by that person.

Finally, as managers, we often see the need to run more clearly than the people we lead. Therefore, it is our responsibility to lead by example, help our associates overcome their personal resistance to change and to start running twice as fast.

The View From Digital Supply Chain Control Towers

Fri, 01 Mar 2019 00:00:00 -0600

As supply chains becomes longer, more global and increasingly complex, supply chain management professionals need a bird’seye view of their networks to ensure that all of the parts are moving together and performing as expected. Some industy experts believe digital supply chain control towers are the best approach for end-toend management.

A supply chain control tower is “a shared service center that monitors and directs activities across the end-to-end supply chain to make it collaborative, aligned, agile and demand-driven” (Bleda et al. 2014). This tool enables organization leaders to react to and correct issues as they arise via four main capabilities, including

visibility from dashboards, alarm generation and business-tobusiness integration
analytics gathered through root-cause analyses, simulations, what-if scenarios, risk analysis and response management
the dissemination of information and action plans
monitoring of outcomes.

OPERATING WITH 20/20 VISION

There are thousands of potential applications for digital supply chain control towers. For example, as companies increasingly convert to omnichannel business models, control towers could help maintain accurate records of the location, amount and availability of product inventory. This data could help supply chain managers determine the best place to stock the inventory — whether that is at a store or pickup locker, a regional distribution center that replenishes stores, or a fulfillment center that ships items directly to a consumer.

Next, a business needs to know the production capability within its supply chain. A supply chain control tower can help determine if a needed item is already in inventory or, if it’s not, how long it will take to manufacture or procure the product and ship it to the needed location. This knowledge is especially crucial for apparel and seasonal items.

Stretching even further, supply chain control towers offer better visibility and command over transportation and logistics operations. Accenture reports that three companies already have achieved success in these areas (Bleda et al. 2014): Unilever set up a supply chain control tower to provide visibility and management control for its multiple transport movements across Europe. Pfizer’s control tower measures the flow of products, orders and shipments. And Dell’s control tower coordinates parts, logistics and field technicians to respond swiftly to customer requests.

There are other uses, as well, such as risk management, vendor evaluation, strategic investment alternatives, supply chain effectiveness and project management, but these tend to require more advanced information capture and analysis.

SHIFTING BUSINESS EXPECTATIONS

Companies are under increasing pressure from end consumers, who have been conditioned by the success of e-commerce companies to expect a wide range of product choices along with high service levels. As a result, supply chains are scrambling to shorten product life cycles, compress manufacturing and delivery times, and better anticipate customer needs. Shareholders and chief financial officers also pressure companies to find ways to control their costs (Bentz 2014).

In this climate, legacy management methods are not enough. Previously, company leaders would walk through their own facilities; visit their partners’ facilities; and correspond with far-away partners and company-owned facilities through telephone, email, and digital and print records to oversee operations. These methods are more susceptible to error, often overlook key information and do not give a real-time picture of the supply chain’s operations and assets.

In recent years, developing technologies have offered supply chain managers more organized insights. One such example is supply chain event management (SCEM), which the APICS Dictionary defines as “a term associated with supply chain management software applications, where users have the ability to flag the occurrence of certain supply chain events to trigger some form of alert or action within another supply chain application. SCEM can be deployed to monitor supply chain business practices such as planning, transportation, logistics or procurement. [It] can also be applied to supply chain business intelligence applications to alert users to any unplanned or unexpected event” (Pittman and Atwater, eds. 2016).

Multinational software corporation SAP offers SCEM software designed to monitor and manage events across distributed processes, inventories and assets. The solution captures events from both a company’s and its partners’ systems, analyzes them against predefined plans, and triggers alerts or automated follow-up activities if deviations are found. Other software companies offer similar tools to support end-to-end supply chain visibility.

But even this visibility is not enough. SAP extended its SCEM software offerings with its supply chain control tower software in 2014. Beyond the benefits of its SCEM software, this updated system can help companies

identify issues before they arise
recapture control of outsourced supply chains
reduce inventory levels
leverage the power of big data
overcome the complexity of information technology
empower their enterprises with real-time decision-making
become more agile
gain end-to-end visibility of their supply chains (SAP 2015).

BUILDING A CONTROL TOWER

Before these benefits can be realized, companies must start by building strong bases for their supply chain control towers. The first step is to choose one of two basic approaches: a one-to-many network or a many-to-many network. The former is a hub-spoke model in which a company establishes direct contact with each of a number of suppliers and customers. In a many-to-many or multi-party network, the host company establishes a network platform through which all parties can communicate directly (Duckworth 2018). Control towers that are built on a one-to-many network offer limited opportunities for visibility and optimization because they tend to utilize disparate systems, which can be difficult to connect and maintain (Duckworth 2018). Conversely, supply chain control towers that are built on the many-to-many network foundation can share data in real time across a multi-party network, which unlocks new achievements in savings, speed, agility and resistance.

Once this choice is made, companies go through the following implementation stages as they grow to fully tap the capabilities of this technology:

The supply chain control tower provides enhanced visibility and helps the company avoid disruption from unexpected events (Bentz 2014). For now, company leaders only react to the events.
The supply chain control tower sets standards for functional excellence, supports cross-functional decision-making, provides basic analytics and what-if analyses, and manages key performance indicators (KPIs) at the function level (Bentz 2014). This enables company leaders to start integrating processes and information technology across silos.
The control tower’s function extends from vertical silos to horizontal processes. It is responsible for enterprise-to-enterprise process excellence and KPIs at the process level (Bentz 2014).
The supply chain control tower continuously assesses the enterprise-to-enterprise value and uses complex, sophisticated analytics to optimize value at every step of the supply chain, thus boosting business value and profitability. Most companies can only aspire to reach this stage at this point in time.

HEIGHT LIMITS

For some companies, stage four is not the only thing that seems out of reach. There are many obstacles that can limit progress. The most common challenge is cost. A supply chain control tower requires a substantial investment, but the return is difficult to quantify at this point. Other challenges are similar to those faced for other types of projects, such as executive buy-in, change management for company processes, systems integration, and privacy and intellectual property issues.

Even once these challenges are overcome, companies also need to determine who or what will be responsible for maintaining the information in the supply chain control tower, analyzing data, distributing and sharing information, solving problems, and making decisions based on insights. In some cases, this may be a person, a group or a piece of software. When the supply chain control tower is fully functional, this responsibility — or, in some cases, the right to access the information — may be shared across organization.

Reaching this level of functionality presents yet another challenge. After the system has been developed for internal use within a company, it must be extended throughout the supply chain and partners will need to be willing to collaborate and share data. This might require some negotiating and convincing in order to gain buy-in.

These challenges are just the tip of the iceberg. The decision to establish a supply chain control tower has substantial economic and interpersonal implications, so managers and executives need to carefully consider the project before jumping in. Partnering with supply chain control companies or software providers can help facilitate the design and implementation process and help leaders navigate through the various challenges that might arise.

LOOKING UP

Because of all of these obstacles, experts classify fully developed supply chain control towers as concepts for the future. “Creating a digital supply chain that functions as a true control tower — where every step along the way is both visible and managed — is the next frontier for global companies that want to succeed,” global trade management company Amber Road writes in an e-book about supply chain control towers (Amber Road 2018). For now, supply chain control towers are in their infancy, and leading-edge manufacturers are only just starting to adopt this approach to managing their supply chains (Heckler and Gates 2017). Though these implementations are limited in scope for now, they have the potential to bring together analytics, automation, augmented decision support, modeling and other capabilities as a centralized function.

This synchronicity will unlock even more visibility into connected aspects of the supply chain. Supply chain managers will be better informed and able to address issues that are not under their direct control by collaborating with supply chain partners. Furthermore, supply chain control towers offer a single version of the truth across functional boundaries and across suppliers, contract manufacturers, transportation carriers, third-party logistics providers and more. Through improved awareness, communication and collaboration, companies can achieve truly efficient supply chains.

Women’s Worth

Fri, 01 Mar 2019 00:00:00 -0600

Today marks the beginning of International Women’s History Month, a global celebration of the social, economic and political achievements of women, as well as a call to advance gender equality worldwide. This is a significant time to reflect on where we have come and what still must be achieved:

According to the United Nations, women earn 77 percent of what men are paid.
Gender disparities in job quality result in lack of access to social protections, such as retirement pensions.
Women are less likely to be entrepreneurs and face more disadvantages starting a business.
Only 5 percent of Fortune 500 CEOs are women.

What this means for ASCM corporate members — many of whom are facing a relentless supply chain labor shortage — is that there is a vast talent pool out there to help create stronger networks and position organizations for sustainable, profitable growth. In the United States alone, women comprise about half the workforce and earn more than half of all college degrees; yet, based on our latest research, they hold only 29 percent of manufacturing jobs. Clearly, too few businesses are tapping into women’s valuable skills, perspectives and insights.

But there are some notable exceptions. The Wall Street Journal recently reported on KitchenAid’s innovative tuition-reimbursement and corporate-training programs, which are helping the company find, hire and cultivate top female talent. Author John D. Stoll tells the story of Director of Plant Operations Jennifer Hanna — “a dream hire for the many companies wrestling with talent shortages these days.

Hanna has worked for KitchenAid’s owner, Whirlpool Corp., since graduating high school. “The appliance giant helped pay her way through community college … then handed her increasing responsibility, encouraged her pursuit of an M.B.A. and put her on KitchenAid’s senior leadership team,” Stoll writes. Today, she is responsible for more than 1,000 people building KitchenAid stand mixers.

Investing in potential

It is true that the economic prospects for workers with few skills are deteriorating even as demand for talent rises. But when companies like KitchenAid turn entry-level jobs into real career opportunities, people enhance their skill sets and economic realities while businesses gain motivated, productive and highly qualified employees.

According to a recent poll, nearly 80 percent of people said tuition assistance made them more likely to stay with an organization, and 60 percent were promoted within two years of graduation. Hanna is proof: “I wanted to find a company that would invest in me at the age of 18,” she tells Stoll in the article.

ASCM was built on the value of learning and development, and we continue this essential mission today. We are currently scaling up our Supply Chain STEM program to reach many more teachers and schools. At ASCM 2019 in Las Vegas, we will host our third Women in Supply Chain Forum, featuring discussions on how to attract, empower and retain women. And we will honor this year’s winner of the ASCM Award of Excellence — Diversity and Inclusion Champion, which recognizes a professional who fosters environments that value equality. With these and other key programs, the global ASCM community is on its way to a better world — for people of all profiles and backgrounds — through supply chain.

Spacious Potential in the Sharing Economy

Fri, 22 Feb 2019 00:00:00 -0600

The sharing economy is no longer just a catchy turn of phrase; today, sharing, renting and subscription services are everywhere. AirBnB for your holiday rental; WeWork for freelancers who prefer the office environment; Rover for the pup’s midday walk; Uber and Lyft when you need someone to drive you places; and Zipcar, LimeBike or Bird Scooters when you’d rather do the driving yourself. The potential applications are endless.

Although only 19 percent of U.S. adults have engaged in a sharing-economy transaction, PwC research reveals that 83 percent of survey respondents believe these services make life more convenient and efficient, 76 percent say they are better for the environment, and 43 percent admit that owning things can feel like a burden.

As ownership becomes unfashionable, the fashion industry is also taking notice.

“In October, the mall fixture [Express] launched Style Trial, a service that allows customers to borrow up to three pieces — with no limits on exchanges, free shipping both ways and free dry cleaning — for $69.95 per month,” writes Jasmin Malik Chua in Sourcing Journal. “If a subscriber loves something to death, she can buy it at a discount for keeps. Otherwise, she can keep garments circulating in an eternally refreshed ‘closet in the cloud’ with virtually infinite options yet zero commitments.”

Jim Hilt, Express executive vice president and chief customer experience officer, explains that this allows customers to tap the company’s “full assortment and styling services without breaking the budget.”

In addition to this kind of flexibility and cost savings, sharing clothes eliminates the hassle of shopping malls and the time spent packing bags for donation — not to mention all those minutes staring at our wardrobes trying to decide if an item still sparks joy.

Shifting business models

Until very recently, most of us would never have considered staying in some random person’s home while on vacation, let alone sharing a sweater with a bunch of strangers. Yet today, Airbnb averages 425,000 guests per night — nearly 22 percent more than Hilton Worldwide.

“The data shows, renting and sharing are becoming increasingly popular alternatives,” the PwC report asserts. “Executives will be wise to assess the role of their product and brand in this model — are you squarely a purveyor of goods, or are you an enabler?”

For those supply chain managers bracing for change and facing some tough calls concerning clothing lifespans; quality control of shared garments; and logistics economics, especially for lower-cost items, there is some good news. The sharing economy is also flourishing in the education space, with LinkedIn Learning, Grow with Google, and a seemingly infinite number of instructive and informative videos on YouTube. Our own channel is bursting at the seams with customer success stories, webinars, research, annual conference sessions, and a multitude of supply chain education tailored to fit just right.

Unlock the Potential of Digital Factories

Wed, 20 Feb 2019 00:00:00 -0600

If smart manufacturing vendors hope to fulfill the potential of their solutions and platforms for digital factories, they must build environments where apps can deliver immediate results with stream processing and cloud integration at the edge.

Edge intelligence refers to the analysis of data and development of solutions at the site where the data is generated, such as the shop floor. Edge intelligence software can run on small compute footprint devices on-premise in order to provide complex event processing on streamed data. These platforms integrate factory data with the supply chain and the rest of the enterprise, train machine learning models, and help scale other transformative technologies with the help of edge intelligence. The aim is full integration with operational technology, lower total cost of ownership and financial viability for customers with limited information technology (IT) resources and increasing amounts of data.

As in many other verticals, the next step for smart manufacturing will demand faster deployment of artificial intelligence and machine learning. More low-code or code-free logic configuration and app development — plus edge-to-cloud, closed-loop machine learning, whereby models train in the cloud, execute at the edge and collect more data for continuous improvement — will make this possible. Fortunately, several vendors have already proven that they can provide both:

AWS, Azure, FogHorn Systems, Software AG, SWIM.AI and Telit, have already productized edge-to-cloud, closed-loop machine learning.
Enterprises in automotive, electronics, oil and gas, and steel manufacturing, among several other industries, have implemented and seen return on investment from edge solutions.
As the amount of custom code required to deploy new solutions on factory floors drops, data and analytic service revenue growth in smart manufacturing will accelerate to reach a global total of $25.6 billion in 2026.

Use cases that leverage edge solutions include networking machines from multiple original equipment manufacturers (OEMs) with proprietary protocols, quality control for automotive paint shops and windshield glazing, executing machine learning models on-premise, predictive maintenance for almost any manufacturing equipment, and automatically orchestrating setup of production lines for electronics contract manufacturers.

In the past, networking operational technology equipment from different OEMs often meant continuously working with custom code, which resulted in immense costs and time demands on the IT departments. Now, many edge solution vendors have started to offer code-free logic configuration and app development, significantly speeding up deployment and scalability of custom apps on the factory floor. As more vendors offer and deploy code-free app development and logic configuration at the edge, smart manufacturing solutions will grow faster, requiring fewer professional services.

These findings are from ABI Research’s “Balancing Edge and Cloud in the Digital Factory” report. This report is part of the company’s smart manufacturing service, which includes research, data and executive foresights.

Conversation Stoppers

Fri, 15 Feb 2019 00:00:00 -0600

Although the second-most popular Valentine’s Day confection was missing from store shelves this season, the conversation was kept alive — largely thanks to agile competitors who saw a market need and filled the emotional void with comparable offerings. Sour Patch Kids produced hearts with teen slang, such as “BAE” and “TOTES.” Krispy Kreme baked up doughnuts with pastel icing and more traditional phrases of affection. And Rival Brach’s has long made nearly identical conversation hearts to the Sweethearts variety.

“For the first time in over a century, the original conversation hearts aren’t rolling off conveyor belts,” writes Annie Gasparro in The Wall Street Journal. “The debacle, caused by candy-maker Necco going out of business last year, has faithful fans buying up the last batch of Sweethearts brand hearts on the black market.”

The New England Confectionery Co. (Necco) has produced Sweethearts since 1866 — at that point, only by special order for weddings. By 1902, the company was selling them to the public. More recently, Necco manufactured up to 13 million pounds of conversation hearts each year, nearly all of which were sold in the six weeks prior to Valentine’s Day.

Financial problems caused Necco to close its factory last summer. Ultimately, Spangler Candy Co. — best known for Dum Dum lollipops — bought Necco wafers, Sweethearts and some other brands. “But it couldn’t ramp up production in time for this year’s big day,” Gasparro explains.

Spangler CEO Kirk Vashaw said in a press release: “There are a lot of manufacturing challenges and unanswered questions at this point, and we want to make sure these brands meet consumer expectations when they re-enter the market. … We look forward to announcing the Sweethearts relaunch for the 2020 Valentine season.”

A more recent press release from the company, titled “Spangler Candy Issues Three-Heart Response to Sweetheart Fans,” is simply a graphic of conversation hearts saying, “MISS U 2,” “WAIT 4 ME” and “BACK SOON.”

Change of heart

According to Gartner’s sales and operations planning (S&OP) maturity model, nearly 70 percent of companies are stuck in the “reacting” and “anticipating” S&OP phases. As Gregory L. Schlegel, CPIM, writes in the inaugural issue of SCM Now magazine: “It’s time to make the jump to the more mature S&OP stages: collaborate and orchestrate.”

Collaboration expands the S&OP process to suppliers and customers; orchestration is driven by demand sensing and shaping. To get there, Schlegel urges readers to apply predictive analytics, probabilistic modeling and programming languages. These solutions enable people to make sense of unstructured data; quantify how their supply chains will react to challenges; develop statistically strong patterns of consumer buying habits; and overcome uncertainty, complexity and risk.

Read Schlegel’s article, and all of the great content, in our brand-new flagship publication. I think U WILL♥ IT.

Not Your Parents’ Workforce: The Rise of Contingent Labor in Supply Chain

Wed, 13 Feb 2019 00:00:00 -0600

As baby boomers retire en masse, organizations continue to tailor their workforce management strategies to younger generations. This brings an increased emphasis on work-life balance and agile, flexible work options that appeal to millennial and Gen Z employees who want to enjoy work on their own terms. The typical 9-to-5 desk job has given way to the gig economy, which promotes a far less structured workday — and a far more complicated talent supply chain.

To understand its broad reach and recent growth, consider the following statistics:

This year alone, there are roughly 77 million freelancers in Europe, India and the United States.
More than 40 percent of workers in the United States are employed in alternate work arrangements, such as contingent or part-time work. This percentage has increased 36 percent in the last five years alone and includes workers of all ages and skill levels.
The average percentage of contingent labor within organizations has increased from 15 to 29 percent in the last year, and 41 percent of employees say they will only work for a company that offers agile employment options.

As contingent labor options become more popular and include more specialized fields, HR and procurement professionals trying to find the right talent at the right time are running into some complex roadblocks. Today, only 16 percent of employees say their companies have well-defined strategies for managing contractors, freelancers and gig workers. The complexity starts with evolving internal ownership of the talent supply chain.

The disconnect between HR and procurement is alarming. As the contingent workforce gains steam, HR has a vested interest in attaining more control over managing and engaging part-time, freelance and gig workers. On the other end, procurement and supply chain leaders remain laser focused on cost containment, supplier performance and risk. Adding to the complexity: outside of the HR and procurement misalignment, most organizations manage their full-time and contingent workers quite differently. Recruiting, hiring, onboarding and retention processes for the two groups can vary greatly, and company policies for contingent workers may be completely different from those for full-time employees.

Closing the labor gap in supply chain

The need for contingent workers rings especially true in supply chain, an industry plagued with a deep-seated perception problem. Many job candidates are deterred from positions in supply chain because of perceived lack of opportunity for career growth and professional status. Incredibly, almost 70 percent of organizations say their search for talent is hampered by this false perception. This creates a significant problem for hiring managers. And, according a study by DHL, organizations are not doing enough to close the hiring gap. In fact, only 36.9 percent of supply chain leaders surveyed say they have adapted their culture to support changing demographics, workforce needs and preferences. For a discipline with a talent crisis, this simply isn’t smart business.

To stay competitive in the war for talent, organizations and their supply chain teams need to bridge the divide between HR and procurement and embrace contingent workforce opportunities. Both departments can drive more value by working closely together. Developing a set of well-defined, transparent policies that span across the total workforce is the first step. The next step is acknowledging that strong workforce management strategies don’t stop at talent acquisition. While companies are filling the labor gap with gig workers, they must have additional processes and technologies in place to speed time-to-fill and increase efficiency.

With younger generations entering the workforce, the number of contingent workers will continue to climb. Contingent labor is still in its infancy, but as the labor landscape continues to evolve, companies need to adapt if they want to remain appealing to potential employees and competitive in market.

Indian Regulations Rain on Amazon and Walmart’s E-Commerce Parade

Mon, 11 Feb 2019 00:00:00 -0600

Amazon and Walmart subsidiary Flipkart are scrambling to revamp their supply chains, vendor relationships and systems. New regulations from the world’s fastest growing economy have undermined these retailers’ business models and obstructed their sales in India’s burgeoning e-commerce sector.

Previously, foreign companies were forbidden from holding their own online inventory and shipping it directly to customers. Amazon had found a workaround in the form of local subsidiaries of firms in which it had holdings, which opponents insisted was violating the spirit of the rule. Largely due to such proxy sellers, Amazon and Walmart had controlled almost 80 percent of India’s e-commerce.

But as of February 1, such goods are not permitted for sale by foreign companies. In addition, these firms are barred from entering into exclusive online sales agreements. A vendor’s inventory also will be considered under the control of an e-commerce marketplace if more than one-quarter of its sales are derived there.

The protectionist move follows ongoing complaints from domestic retailers over anticompetitive practices. Amazon and Walmart both requested a six-month postponement of the effective date but were denied.

“Thousands of products were pulled from Amazon.com Inc.’s India website Friday — the first direct impact from the country’s new e-commerce rules,” writes Corinne Abrams in the Wall Street Journal. The article goes on to explain that the restrictions are the latest effort by India to curb U.S. tech giants’ dominance in the country and “promote homegrown companies” as Prime Minister Narendra Modi seeks a second term.

“Both Amazon and Walmart have made big bets in India, where the e-commerce market is estimated to balloon to $72 billion in 2022,” Abrams adds. “Amazon has pledged to invest $5 billion to expand in [India], while Walmart’s takeover of India’s Flipkart for $16 billion was its biggest acquisition ever.”

Global supply chain know-how

The operations of these e-commerce giants have been thrown into disarray. As these companies, and others, navigate such severe regulatory pressure, success will hinge upon the effectiveness, responsiveness and flexibility of their supply chains.

ASCM provides the resources you need to plot your own course through the ever-shifting global marketplace. The APICS Certified Supply Chain Professional (CSCP) program enables individuals to master the fundamentals of supply chain strategy, business model design, relationship-building, risk management and much more. In particular, the CSCP learning system includes a module centered around monetary, regulatory and trade considerations; negotiation and collaboration; and international standards and compliance. Begin your journey toward this world-class certification today.

Avoid Hard Hits from Tariffs and Global Volatility

Tue, 05 Feb 2019 00:00:00 -0600

Global economics can sideline any company that’s unprepared for aggressive competition and drastic shifts in pricing. Even long-standing networks are starting to crack under pressure, as manufacturers, distributors, top brands and retailers struggle to grasp the impact of these pressures on their business models. It is more important than ever for organizations to prioritize supply chain agility and adapt to make changes as quickly and effectively as possible.

In a recent study, two-thirds of economists surveyed reported that trade tensions or tariffs are the biggest risks to their economic growth forecasts. Some companies plan to pass increased costs to customers, whether they are consumers or other businesses. Some are considering possible design changes, evolving product specs or rerouting resources through different suppliers. As companies react, a domino effect builds momentum, bringing more and more companies into the disruption. Consequently, predicting outcomes becomes more difficult.

Even when the current political hailstorm subsides, the global landscape will still be subject to dramatic shifts. Population migration, consumer trends, regulations, resource availability and innovations will cause large-scale fluctuations. Continuous change is the new normal. Companies that want to play in the global arena need to rewrite their playbooks.

Resilience requires out-of-the-box thinking and problem-solving. Technology can support this innovative approach. As products today tend to be highly complex, with computerized components and subassemblies coming from multiple countries, the big picture can include multiple partners and suppliers, adding to the need for well-thought-out strategies. Modern solutions, such as predictive analytics and artificial intelligence, help make sense of multi-tiered networks and what-if scenarios. Careful planning ensures elements converge in the right place at the right time, so highly personalized customer orders can be fulfilled as needed.

Proactive responses

Fortunately, supply chain planning and execution technologies have made huge strides in the last decade. Software providers have begun applying cloud computing, big data, business intelligence, machine learning, predictive analytics and artificial intelligence to solutions. Such tools can help optimize inventory, meet customer demands, identify patterns and spot early warning signs of potential problems — before it is too late.

Analytics must look to the past, as well as the future, to enable companies to predict likely outcomes. This requires a unified system that underpins the entire network, providing a digital connection for collaboration and strategic planning. When all parties in a supply chain are plugged in, information that was once locked away in data vaults can be accessed and consumed. Updates from the outer nodes of the network are made in the system and are instantly reflected in this virtual depiction of reality.

Data that falls outside of established parameters can alert users to issues or automate responses, such as putting a hold on a payment to a supplier that misses agreed-upon delivery dates. Supply chain systems can process data from weather forecasts and automatically adjust expected delivery dates, calculate fines for late delivery or notify carriers of changes that need to be made to logistics contracts. Workflows can be created that push data to users, aiding in decision-making. Previous solutions and possible alternative scenarios can be presented in dashboard-like views. Because the user experience is highly intuitive, even recently on-boarded personnel can play an active role in strategic execution.

A window into the future

The current political storm is shining a spotlight on the importance of modern supply chain planning and execution solutions. Volatility is not going away, even when political conflicts are resolved. Supply chain success will require network-like connectivity that engages all parties. Customers, carriers, third-party logistics providers, banks and suppliers all benefit from visibility and windows into the future. Sharing data, while protecting security and intellectual property, is essential when working in a global landscape and forging new relationships.

Climate Change Disruptors on the Rise

Fri, 01 Feb 2019 00:00:00 -0600

As I write this, the National Weather Service (NWS) is warning of severe cold here in Chicago, with wind chill temperatures expected to reach an excruciating 55 below zero. The NWS has even urged us to protect our lungs by minimizing talking and not taking deep breaths. Meanwhile, on the other side of the world, people in South Australia’s coastal capital of Adelaide are facing a different kind of lung injury — from dangerous air quality and ozone exposure. Adelaide recently reached 46.2 Celsius (nearly 116 degrees Fahrenheit), breaking a 130-year record.

When we talk about extreme weather statistics such as these, they are typically followed by warnings of disastrous sea levels, catastrophic Arctic ice decline, and life-threatening floods or hurricanes. “Not enough water to make Coke” and “sweltering Disney theme parks” do seem to pale in comparison. However, a recent Bloomberg article suggests that climate change will have a business impact that is devastating in its own way.

“Climate change is expected to cascade through the economy — disrupting supply chains, disabling operations and driving away customers,” author Christopher Flavelle writes, adding that numerous executives see “inherent climate-related risks with the potential to have a substantial financial or strategic impact on their business.”

One of the most commonly cited issues by company leaders is draught. Specifically, in addition to Coca-Cola fearing water shortages will threaten its bottling operations, Intel is concerned about escalating costs for the water-intensive process of semiconductor manufacturing.

Other professionals are kept up at night worrying about damage to their networks from hurricanes and wildfires (AT&T), global pandemics dissuading people from travel (VISA), and increased flooding and flood insurance premiums forcing mortgage holders to default on payments (Bank of America).

Interestingly, some organizations have identified opportunities amid the chaos, as climate change can “bolster demand for their products.” With more people facing illness, Merck & Co. sees the potential for “expanded markets for products for tropical and weather-related diseases,” Apple predicts disasters will make its iPhone “even more vital to people’s lives,” and Home Depot expects higher air conditioner and ceiling fan sales.

Sustainable supply chains

No matter where your company falls on the threat-versus-opportunity spectrum, climate change is altering the global economy immensely, and supply chains must transform to survive. At this time of both challenge and potential, ASCM is collaborating with a network of world-class organizations — including The Bill & Melinda Gates Foundation, Accenture, Deloitte and PwC — to create opportunities for the kind of supply chain innovation that will be mandatory in the coming years.

In addition, our new SCOR-Enterprise (SCOR-E) designation features an ecological dimension, which focuses on the circular economy, climate strategy, energy, water and waste, material usage, and product life-cycle stewardship. SCOR-E is the industry’s first and only corporate supply chain designation.

I hope you will make the most of these valuable member benefits. ASCM mission-driven strategic initiatives such as these draw on the power of supply chains to address pressing global issues and achieve the brightest futures for individuals, companies and communities.

Check Out Our Transformation

Fri, 25 Jan 2019 00:00:00 -0600

For months now, our dedicated board of directors, enthusiastic volunteers across the globe and talented staff have been working toward an exciting business transformation. I couldn’t be more excited to share with you that, as of January 22, we have officially become the Association for Supply Chain Management (ASCM).

As supply chain secures its position as a strategic imperative for all organizations, a growing number of professionals like you are now in board rooms, the C-suite and other vital leadership roles. This shift demonstrates a clear opportunity in the launch of ASCM, the largest nonprofit association for supply chain management. ASCM’s mission is to be the global leader in supply chain management transformation — every aspect, every audience. We will continue to hold ourselves to the highest standards, while the industry constantly redefines what’s standard. We are and will be driven by a desire to do more than just move the dial, but to enable supply chain leaders to transform how organizations do business.

FAQ

Recently, we have received some questions from members and customers, and I would like to take this opportunity to share key details with you. First, the APICS brand and logo will be a part of ASCM. APICS credentials and the APICS body of knowledge will continue to be the global standard in learning and professional development. Likewise, we will uphold the credibility and integrity of the APICS learning systems. Best of all, ASCM’s broad reach will increase the visibility of APICS designations and enhance your own marketability as a supply chain authority.

APICS Chapters and Partners will continue to serve ASCM members and certification candidates with local networking opportunities and in-person training to enhance their careers.

All existing APICS memberships have become ASCM memberships. Soon, members will receive a kit and card, as well as information on member benefits. Dues remain the same.

In addition to membership documents, keep an eye out for the big reveal of our brand-new flagship publication. To celebrate the launch, all members will receive a complimentary print copy. Our publications team is delivering the same award-winning content you’ve come to expect from APICS magazine, with renewed focus on the most essential supply chain issues and a more modern design. Similarly, this weekly newsletter has a fresh new look — I hope you’re enjoying the experience.

Perhaps our largest differentiator is ASCM’s new network of global alliances and thought-leadership collaborations. These partnerships will fuel supply chain innovation and deliver a portfolio of products and services to our members and customers, enabling ASCM to make a positive impact on supply chains everywhere.

Please take a few minutes to follow our new company page on LinkedIn. You can also visit ascm.org to discover how ASCM is advancing corporations and their workforces through learning and development, corporate transformation, and making an impact on supply chains around the world. Together with ASCM, you can be a part of creating a better world through supply chain.

APICS Education Advances People and Performance at Weir

Tue, 15 Jan 2019 00:00:00 -0600

The Weir Group PLC is a global engineering and equipment manufacturing company headquartered in Glasgow, Scotland. The business is organized in four divisions serving the mining, oil and gas, and power industries, with approximately 18,000 employees in 70 different countries. Weir’s operating model is decentralized into local or regional businesses based on either the markets they serve or products they make. Each business is responsible for its own profit or loss.

Uniting Diverse Businesses

In 2014, Weir launched a value chain excellence program to improve overall performance. As part of the initiative, an internal assessment of supply chain capabilities was performed. The assessment identified that there were varying degrees of capabilities and practices across the organization, with certain businesses requiring the establishment of fundamental supply chain and operations practices. In addition, Weir lacked a common language of terms or practices.

“In most locations, people working in the supply chain functions had little or no formal training,” explains Mark Duncan, value chain excellence lead, Americas. “Their capabilities were limited to their own experiences and what had been passed down from other employees. This translated into inconsistent supply chain performance across the various businesses.”

Weir turned to APICS to provide broader views and a full body of knowledge in supply chain management. By having a common knowledge base and improved people capability, Weir was able to significantly improve overall company performance. In fact, the results were so impressive that APICS Award of Excellence judges recognized Weir with the 2018 Education Award.

Education and Application

With people in different countries, divisions and businesses, it was critical for Weir to develop a common understanding of the APICS material and allow employees to share their experiences, practices and learning with colleagues. Additionally, Weir leaders wanted to provide the training at different sites to allow participants to see and understand each business, operating model and how they could apply the concepts they were learning from the APICS material.

To accomplish these objectives, Weir engaged the APICS Houston Chapter, which had been providing very successful on-site APICS Certified in Production and Inventory Management (CPIM) courses at the Weir business in Houston, Texas. The Houston Chapter agreed to send the same instructor to teach all the CPIM courses to Weir employees throughout the world.

“A key challenge here was getting people from all over the world together for classes,” Duncan says. “This provided some logistical challenges in not only travel, but also language. For many of the students, English was a second language. … They not only had to learn the material, but also understand a new language. We asked the instructor to adapt examples and speak slowly to allow better understanding for a global audience.”

In the fall of 2015, Weir began the process of holding CPIM courses for 120 employees from 24 different countries in five regional training sessions. The courses were held every six months in Australia, Malaysia, England, the Netherlands, Scotland, Chile, Brazil, Peru and six locations in the United States of America.

For each course, participants would travel to the designated location, where they would spend the week being instructed. Weir supplemented the material with site tours and workshops. The company also paid all expenses — including exam fees — and employees received their normal pay during the training. To further support the APICS education, Weir purchased a corporate membership, and all CPIM participants were put under the umbrella. To encourage the use of APICS resources and education, even those supply chain directors not participating in the training, as well as other key people in each division, were put under the Weir membership umbrella.

Award-Winning Results

At the end of the CPIM courses, all participants gave a presentation to their peers, as well as a member of the executive management team. Each shared what they learned, what they applied to their business and how it improved performance.

“Three common themes arose from the training,” Duncan notes. “These include the benefit of using all levels of manufacturing planning and control; the benefit of applying the appropriate manufacturing, supply and inventory processes to each unique manufacturing environment; and a common understanding of terms and best practices.”

Additional results include the following:

One business achieved a 45 percent reduction in lead time, and another reduced inventory by 20 percent.
At the end of 2017, Weir’s Oil and Gas division realized a 67 percent increase in orders over the previous year.
The Minerals division saw an 11 percent increase in orders.
As a result of enhanced sales and operations planning processes, Weir has been able to deliver to additional demand and gain market share.
The Salt Lake City business, which previously had on-time delivery in the single digits, is now delivering on time 98 percent of orders.

“In my opinion, the most valuable result was developing more capable people,” Duncan says. “The APICS participants used their learning to not only improve the supply chain in their location, but also educate others. Consequently, many of the participants have taken on additional leadership roles.”

APICS education is now broadly supported throughout Weir. In addition, the company has scheduled the next wave of CPIM courses and there are discussions to support an APICS Certified Supply Chain Professional course.

“People and their development is a strategic pillar for Weir,” says John Heasley, chief financial officer. “Through APICS education, Weir has been able to increase the capability of our people and organization. This increase is allowing Weir to make changes in how businesses operate, manage their supply chains and manage inventory. Weir will continue to support APICS education because it provides our employees with a broad body of knowledge, which can be applied to their particular business situation. In turn, improvements at the local business level will improve the overall performance of the Weir Group.”

POLCA: A Simple Visual-Control System To Boost Profitability

Tue, 08 Jan 2019 00:00:00 -0600

Increasingly, today’s manufacturers are reorganizing their shop floors into cells. The APICS Dictionary explains that a cell is “a manufacturing or service unit consisting of a number of workstations and the materials transport mechanisms and storage buffers that interconnect them.” Meanwhile, order quantities are getting smaller, as businesses are seeing more orders for customized products. To serve this high-mix, low-volume environment, companies need to route jobs through varying combinations of cells.

Unfortunately, there have been no significant changes in the use of materials requirements planning (MRP) and control systems. Traditional systems do not take advantage of the cell structure. Plus, MRP has difficulty addressing the variability in a high-mix, low-volume business because MRP logic can lengthen lead times, causing late deliveries and an increasing cycle of rush jobs. Add-on solutions such as finite capacity scheduling and manufacturing execution systems can be expensive and take a lot of time to implement. Finally, kanban — while simple and straightforward — is inappropriate for low-volume or custom production.

There is an effective and proven solution: POLCA. POLCA stands for paired-cell overlapping loops of cards with authorization, with each of these terms signifying a feature of the system. This a cardbased, visual tool that manages job flow by controlling which jobs should come next in order to meet delivery targets. In even the most dynamic environments, POLCA ensures that upstream operations use their capacity effectively by working on jobs that are needed downstream while preventing work-in-process buildups when bottlenecks appear unexpectedly.

Real World Success

Alexandria Industries specializes in small batch and custom aluminum extrusions. For several years, the Minnesota-based company had struggled with long lead times and late deliveries. Alexandria Industries professionals tried numerous production control strategies — including enhancing MRP and implementing kanban — but none of these approaches had alleviated the problems. Newly implemented shop floor production cells reduced lead times from 12 weeks to about 8 weeks, but the overall material flow problem remained, and late deliveries still required herculean expediting efforts.

After much deliberation, Alexandria Industries’ management decided to implement POLCA. Within months, the business had cut both lead times and work in process (WIP) by more than 50 percent and was achieving near-perfect on-time delivery. This led to a dramatic increases in sales. Moreover, less expediting and rush shipping expenses also boosted profitability. Time that managers had previously spent on hot jobs was greatly reduced, allowing these people to focus on strategic business efforts. Perhaps most importantly, the benefits of POLCA are not confined to the shop floor; they extend to the entire organization.

Authorizations

Even though the A comes last, the starting point for POLCA is the concept of authorization. Authorization dates for each cell in a job’s routing are calculated by backward scheduling from the due date using the planned cell lead times. Sorting through the data for all jobs leads to the creation of an authorization list. It contains only jobs that have not yet been launched into the cell, sorted by authorization date.

A central part of POLCA is that jobs with a date of today or earlier are authorized, while those with a date of tomorrow or later are not. Only authorized jobs can be launched, and these are highlighted in the list for visibility.

Paired-Cell Loops of Cards

If jobs flow between any two cells, they are connected by a POLCA loop. The loop contains circulating POLCA cards, which are labeled based on the origin and destination cell. To further enhance the visual nature of the system, cells are assigned colors and cards are color-coded.

POLCA cards signal the availability of capacity at destination cells. For example, when Cell A is authorized to start a job destined for Cell B, the Cell A team must have an A/B card to launch the job. Additionally, each cell has a POLCA board where available cards are organized. If an A/B card is available on Cell A’s board, the job can be launched. Then, the A/B card is kept with the job. When Cell A completes the job, it sends the job, along with the A/B card, to Cell B. The card conveys the message, “We finished one of the jobs you sent; you can send us another.” Thus, a returning POLCA card signals available capacity in a downstream cell.

POLCA cards ensure that upstream cells work on jobs that continue to flow downstream, instead of those that will end up sitting at a bottleneck. These capacity signals are a key reason why POLCA works so well in low-volume and custom production. To clarify: Suppose there are five cards in the A/B loop. If no A/B card is available to Cell A, this means there are five jobs already at, or on their way to, Cell B. Working on yet another job would result in more piling up at Cell B. Instead, POLCA rules redirect Cell A to work on a job destined for another cell that could benefit by receiving it.

Overlapping

The remaining portion of the POLCA acronym is “overlapping.” To understand this element, consider a situation in which Cell A has completed a job going to Cell B. It travels — along with the A/B POLCA card — to Cell B. Suppose, after Cell B, this job will go to Cell G. This means there is a B/G POLCA loop as well. Therefore, when the job arrives at Cell B, this does not mean the team begins working on it. Rather, the cell must make a decision.

To do this, the team needs to answer three simple questions: What’s the next job on the authorization list? Has the material for this job arrived from the upstream cell? And do we have the right POLCA card for this job? If there is an authorized job on the list, and the answers to questions 2 and 3 are “yes,” then the B/G card is allotted to this job and it is launched into Cell B. If not, the team should engage in secondary activities, such as continuous improvement, or assist other cells that are bottlenecked.

Starting Small

The team at Alexandria Industries decided to first try POLCA in a small, self-contained area. They chose products that traveled from one of the extrusion presses to the centerless grinding cell. This was a good test case because products on this routing suffered from inconsistent deliveries.

Alexandria Industries professionals came up with three problems to be solved:

1. Reduce queue times by eliminating the padding that had been put in place as a safety margin for unexpected problems, errors and schedule changes.

2. Eliminate the stocking of semi-finished products. In the past, commonly used, semi-finished products were made to stock and stored to optimize batch sizes and reduce setups.

3. Implement a make-to-order process on the extrusion press to reduce the extrusion batch size.

Once leaders approved these objectives, team members proceeded by training the affected shop floor and office personnel. Next, they designed the POLCA cards and chose POLCA board placement. They decided how POLCA cards would be incorporated into the shop packet and how the packet would move along with the product. Then, it was decided that the team in the second cell would be responsible for the return of the POLCA cards. Lastly, a detailed procedure was established for the scheduler to assign the inventory of semi-finished products until they could move to a make-toorder approach.

The transition to POLCA at Alexandria Industries was smooth and swift. It was clear early on that POLCA was working. Floor space started to visibly clear up as WIP decreased and delivery performance improved. Furthermore, in less than two months, expediting efforts were almost eliminated. These results convinced decision-makers to extend POLCA to the whole factory.

Simple and Effective

POLCA has been applied in large multinational organizations and job shops with only 10 machines, in a wide variety of industries and international locations. These implementations have demonstrated that, through POLCA, companies can reduce lead times, eliminate expediting and achieve the highest levels of on-time delivery. Factors contributing to the success of this uncomplicated and practical system include the following:

POLCA is designed for high-mix, low-volume production, which is crucial for companies wanting to succeed in demanding production environments.
Shop floor personnel find POLCA easy to understand. They support its operation and stimulate organization- wide buy-in.
Because it is a visual system, POLCA cards and boards provide instantaneous feedback to workers and management on the status of any area.
POLCA does not require complex software, so factories can implement it quickly and without great expense.
The tool builds on the increasingly popular cell structure and supports better coordination among cell teams.

“We had struggled to implement a pull system for our high-mix, low-volume products,” explains Tom Schabel, CEO of Alexandria Industries. “Through implementing POLCA, we dramatically reduced our work-in-process, freeing up cash and creating additional space for manufacturing. In addition, our internal chaos decreased, and customer satisfaction and profitability heightened.”

Does Your Supply Chain Move at the Speed of Customers?

Fri, 04 Jan 2019 00:00:00 -0600

Imagine the heart of a city: traffic on the roads, people exiting a bus as they head to work, a vendor on the sidewalk selling flowers. Or picture a quiet, suburban neighborhood with someone walking a dog, kids riding bikes and the hum of a lawnmower. No matter where you are, the scene likely also includes passing trucks from DHL, FedEx, UPS, the postal service and a variety of regional parcel carriers. With the ever-escalating amount of e-commerce shopping, the number of delivery vehicles on the roads continues to skyrocket. Unfortunately, many of them also are facilitating costly returns because a product turned out to be nothing like its online representation.

The e-commerce boom is in full swing, so accurate deliveries are becoming ever more essential. There is pressure to create an exceptional customer experience, and winning the last mile is a huge part of this challenge. To avoid added costs, inefficiencies and errors, industry trading partners must collaborate on scalable methods and systems for channel consistency or risk falling short of competitors who get it right.

Recognizing that fulfillment now demands a more modern approach, smart supply chain professionals are working to create standardization that can drive efficiencies and expand sales opportunities across networks. They are focusing on three key areas related to last-mile success:

Enhance real-time inventory visibility using item-level radio frequency identification (RFID) tagging.
Optimize the business processes most closely related to fulfillment.
Improve the accuracy and completeness of product information with best-practice guidelines.

RFID

Real-time stock keeping unit (SKU)-level inventory visibility and accuracy makes supply chains nimbler. This can be seen at retailers such as Macy’s, which, according to Forbes, has been leveraging RFID for several years as afoundational component of its omnichannel operations. In her Forbes article, “Is The ‘RFID Retail Revolution’ Finally Here? A Macy’s Case Study,” Barbara Thau writes that the retailer plans to expand its use of RFID to track every item across its fleet of stores and fulfillment centers. Since the start of this initiative, Bill Connell, Macy’s senior vice president of transportation, told Thau that his company has noticed “a big impact” on sales and profitability across several product categories from RFID.

The story notes that the RFID Lab at Auburn University has found that the technology raises inventory accuracy from an average of 63 percent to 95 percent and reduces retail out-ofstocks by as much as 50 percent. RFID also can help ensure that a company does indeed have an item in stock before fulfilling an online order. Plus, complete and accurate product information gives consumers a fuller picture of what they are buying, which reduces the incidence of costly returns.

Like Macy’s, numerous retailers are publicizing their efforts to optimize their supply chains for speed, agility and improved customer experiences. Many achieve these objectives through the implementation of item-level RFID for an enhanced view of inventory quantities and their locations — from the factory floor to the fulfillment center, store shelves or a truck heading to the consumer. In addition, many retailers are starting to request that items be RFID tagged at the point of manufacture. With this kind of visibility, retailers can find a manufacturer’s products more quickly, enabling them to fulfill orders faster.

Some manufacturers are responding by implementing source-tagging, which enables trading partners to gain inventory visibility via the sharing of data through their disparate systems. This is critical to making products available for the consumer regardless of the path to purchase. Impressively, Auburn University’s RFID Lab reports that the use of item-level RFID tagging in manufacturer systems alone delivers an 80 percent improvement in shipping and picking accuracy and improves receiving time by 90 percent.

Optimized Processes

The recent Localz and eyefortransport supply chain business intelligence whitepaper, “Last Mile Logistics,” includes feedback from supply chain, logistics, retail and manufacturing executives. The report reveals that the top challenges associated with the last mile include delivery efficiency, managing customer expectations and last-mile visibility. When asked what customers are demanding most, fast delivery (same or next day) and full visibility were the major concerns.

This study is just one indicator of a larger issue associated with the last mile: the discrepancy between what the consumer wants and what supply chains can actually deliver. For instance, while customers believe that two-day shipping should be free, fulfillment costs per order have risen 31 percent in the past year due to investments in omnichannel capabilities, according to the National Retail Federation’s “State of Retailing Online” report. For industry to move at the speed of the consumer, there is no room for waste — and optimizing the business processes that feed fulfillment will be key to closing the gap.

Another key consideration is the significant increase in the volume of returns. As a result of this trend, e-commerce logistics costs, as a proportion of sales, are predicted to continue to rise in the next few years, according to the “Global e-commerce Logistics 2017” survey released by Transport Intelligence. Again, it’s clear that holistically driving waste out of the supply chain is essential to ensuring fewer unnecessary costs are added to a system already forced to absorb more.

With particular relevance for last mile, more automation based on standards at the fulfillment center contributes to on-time, accurate deliveries. Inefficiencies such as mispicking can cause fulfillment centers to lose as much as $400,000 every year, according to research by Honeywell. Standards enable the alignment of trading partner data to power RFID, bar code scanning and robotic systems used during fulfillment. These tools help supply chains ensure that the product picked from inventory is the correct one leaving the fulfillment center or warehouse.

Best-Practice Guidelines in Action

To keep customers happy and decrease the likelihood of costly returns, leaders at footwear brand J. Renee knew it would be critical to provide their shoppers with accurate website images, product descriptions and deliveries. After all, superior online and delivery experiences are even more essential in a space where people cannot feel or try on the product in person. These inefficiencies were further exacerbated by the sheer number of website images J. Renee must aggregate from each brand the company works with. The existing manual processes were far too time-consuming.

In an effort to improve its capabilities, the business chose to focus on effective collaboration with trading partners, particularly with regards to the quality of product information made available to consumers. This began with J. Renee professionals working to reduce the complexities of image sharing through the development and implementation of the Release 3.1 GS1 U.S. Apparel and General Merchandise Best Practice Guideline for Exchanging Product Images and Attributes. (See sidebar.)

“For each shoe we make, we may have as many as 70 images attached to it to meet the needs of our various retail partners,” explains Coby Sparks, chief information officer and chief operating officer for J. Renee. “With as many as 60 styles produced in any given season, you can see how the need for guidelines was at the top of our wish list.”

The delays and duplication of effort were greatly reduced with the industry’s conformity on a standardized way to present images and data attributes. Though it seems simple, the agreement to state “.jpeg” as the preferred electronic format, for example, has been invaluable. Clear instructions for color designation, sizing in dimensions and pixels, clipping path, backgrounds, orientation, white space and other technical specifications also significantly streamlined J. Renee’s processes. Today, with greater efficiency and accuracy in its supply chain, all of the company’s partners are benefiting.

Win the Digital Marketplace

With the need for ever more consumable and extended data, supply chains must transition from inefficient, time-consuming and often manual data-management processes and automate operations in order to better anticipate what consumers want. As fulfillment continues to grow in complexity, the need for the standardization of processes will be an essential part of ensuring efficiency and staying competitive. Walmart and Amazon are raising the stakes daily and creating an unprecedented digital marketplace. The most agile, forward-thinking supply chains will win the race.

SIDEBAR: Best Practices for Better Supply Chains

A retail industry workgroup focused on product information and images recently expanded a widely used guideline that is designed to ensure consistency from digital experience to physical product delivery. The Release 3.1 GS1 U.S. Apparel and General Merchandise Best Practice Guideline for Exchanging Product Images and Attributes provides detailed guidance on how to create, manage and supply product images and data attributes for use in commerce applications across retail operations.

It also includes

an attribute for California’s Proposition 65 law, which regulates substances that may cause cancer or reproductive toxicity
electronic data interchange information for images
guidelines for montage and 360-degree images, as well as 127 new attributes, bringing the total available attributes to 193
a matrix showing product types applicable to attributes and examples of attributes
in-document searches and navigation by enabling a hyperlink from the attribute in the matrix to its applicable definition or code list.

The 193 product attributes include product characteristics such as handmade, reversible and dishwasher safe, as well as best practices for presenting montage and 360-degree images online. This additional information extends beyond the traditional supply chain data already exchanged between retail buyers and sellers and supports a consistent online consumer experience.

Supply Chain Optimization with High-Level Value Stream Mapping

Wed, 02 Jan 2019 00:00:00 -0600

Too often, companies view their supply chains as a loose collection of manufacturing sites, warehouses and distribution centers to be managed as separate entities. Professionals fail to realize the full extent of the interconnectedness and interdependence, nor the benefits of a system-wide view. While this behavior usually is intended to enable growth in the short term, it hinders the identification of opportunities for broad system optimization and can negatively affect profitability in the long term.

Consequently, it is valuable to periodically take a step back and look at the entire supply chain to confirm that it is an integrated system that really makes sense. Questions to be answered include the following:

Are we manufacturing products in the best locations, aligned with emerging global markets?
Are we taking advantage of economies of scale or economies of flexibility in manufacturing?
Is our network flexible enough to take advantage of frequent market shifts?
Would a different network design cut lead times to our customers and make us more responsive? Would those shorter lead times reduce inventory requirements — both pipeline inventory and inventory at the receiving end?
Do we have a global inventory strategy, and does it cause required inventories to be at the most appropriate locations?
Does our strategy employ mathematical analysis of replenishment frequencies and lead times to set cycle stock, as well as analysis of all variabilities to set safety stock?
Have alternate replenishment strategies been evaluated, such as occasional expedited shipping, to reduce risk and the need for high safety stock levels?
Are we taking advantage of postponement and finishto-order strategies where possible? Value stream mapping is a proven practice at the manufacturing level and can render an equal or greater value at the supply chain level by providing a practical, graphical and data-driven picture to frame analysis of these factors.

This approach offers three key advantages: First, it provides a pictorial view of the end-to-end supply chain with key flow data and control signals, offering insights that are hidden by traditional supply chain views. Second, multifunctional discussions that naturally occur while building the map create a broad, detailed understanding of supply chain performance. And third, opportunities are framed in a system-wide context, which encourages comprehensive optimization.

To deliver the full improvement potential, the value stream map must follow a well-developed plan, with appropriate preparation and follow up.

THE METHODOLOGY IN ACTION

W.L. Gore & Associates is a global materials science company dedicated to transforming industries, improving lives and solving complex technical challenges in the most demanding environments — outer space, the world’s highest peaks and the inner workings of the human body. Gore’s diverse products, such as GORE-TEX fabric, use advanced materials to generate meaningful impact for end users and consumers. Gore employs 9,500 associates and has manufacturing facilities in the United States, Germany, United Kingdom, Japan and China, and sales offices around the world.

While recent supply chain initiatives had led to some degree of supply chain optimization improvement, Gore supply chain leaders knew that additional benefits could be achieved with a more structured approach. They chose to apply high-level value stream mapping to the entire supply chain. So far, the process has been piloted on four supply chains representing the variety of Gore’s businesses, leading to increasing value as the process continues to advance.

One of the supply chains involved in the pilot manufactures and delivers assembled products. The supply chain starts with machined components purchased from suppliers in Europe and North America. Subassemblies are made from these components in plants in the United States and Europe. Various subassemblies then are shipped to and from plants in the United States, Europe and China for final assembly. Finally, they are distributed to the world-wide customer base. Figure 1 shows a simplified portion of the map.

One insight gained from this map was that flow could be significantly improved. For instance, final assemblies made on any one of the three continents could be shipped to any other continent, creating several crisscrossing paths. This had been known prior to the mapping, but neither the full extent nor the volumes involved were fully appreciated. As a result, the team decided to make final assemblies in each customer’s specific region, which saved considerable transportation costs and shortened delivery lead times.

The map also revealed that machined components were purchased from several suppliers in the United States and several more in Europe. Some components needed in the United States were purchased in Europe and then shipped to the U.S. plant. The reverse situation applied as well. The team therefore chose to purchase all components from a single supplier and have them shipped directly to the point of use, offering both increased volume discounts and reduced shipping costs. A related improvement was to have component suppliers prepare subassemblies from their components, further simplifying the supply chain.

Continued mapping of other Gore supply chains revealed the following initiatives:

Develop a global inventory strategy for each supply chain (versus locally developed independent targets) to put inventories in the most appropriate locations and significantly reduce or eliminate duplicate or redundant inventory.
Share quality data between a plant producing a major intermediate and the plant using it to make the final product to avoid duplicate testing and shorten lead times.
Consolidate production equipment from two operations in Asia to a single plant to cut lead time by three weeks and free up floor space for future expansions.

The combined financial benefit from the first four initiatives will approach $5 million annually when fully realized. At Gore, the creation and analysis of the map and development of improvement possibilities occurs in a multifunctional, team-based workshop spanning several days. The scope indicates who should participate, but it generally includes all functions influencing supply chain performance — business leadership, planning and scheduling, logistics, manufacturing operations, procurement, quality, and sometimes human resources and maintenance.

The first pilots were scheduled as five-day events. With lessons learned and more thorough preparation, this has been shortened to four days. As Figure 2 shows, preparation is critical. There must be a clear scope and well-understood need for improving the particular supply chain.

A preliminary supply chain map is developed prior to the workshop, with most of the focus on material flow, how much detail is needed to understand performance and detractors, and how to best arrange the important nodes on the map to clarify flow. Although very important for the workshop, less time is spent on information flow.

The preliminary map is created in an electronic application, then printed as a wall-sized copy to use during the workshop. The electronic map is updated at the end of each day, and a new copy is printed prior to the start of the next session.

Gore team members discovered that it is imperative to identify the data that will be needed to understand supply chain performance. Value stream maps tend to have standard data box layouts, but they may need to be modified to focus on data that is relevant to the scope of the supply chain being studied. Developing a data collection plan with a core group of supply chain associates, with planned periodic check-ins, helps the team stay on track and provide the best information available. Extreme data accuracy is not required; rather, the goal is data that is directionally correct.

Gore associates also understand the importance of agreeing on objective criteria for ranking both benefits and feasibility of the opportunities found prior to the workshop itself. This makes it much more likely that there will be a fair comparison of all opportunities and that personal bias for pet projects won’t cause poor decisions. Depending on the kind of opportunities identified, the team sometimes needs additional training to better understand how to resolve difficulties and determine the best approaches.

Post-workshop activities are critical to achieving the benefits discovered, so they are addressed during the workshop. In addition to the specific project charters, follow-up review meetings are scheduled to ensure that all projects are on track and to provide help if any are not. Ongoing reviews with business leaders ensure that resources aren’t being diverted to other tasks and help overcome any newfound barriers.

CONTINUING AND SUSTAINING

Gore leaders view this optimization process as a continuous cycle. They believe that periodically reviewing progress on current initiatives, updating the map to include successes and seeking new opportunities based on evolving business priorities are the best ways to sustain and grow supply chain performance. This continuous cycle also validates value for the optimization process, maintains momentum for ongoing initiatives and enhances further learning about the behavior and nuances of each supply chain.

SIDEBAR: CRITICAL SUCCESS FACTORS

The following can make or break a value stream mapping workshop:

Leaders must provide clear direction on business priorities. If SCOR metrics have been developed, they can provide excellent guidance.
Engage key participants, including business leaders. These professionals provide significant benefits to the full extent they participate; their participation at kickoff and final priority selection should be a minimum requirement.
Select the workshop week far enough in advance that participants who will be travelling have time to make reasonable arrangements.
Create a preliminary — 70-80 percent complete — supply chain map. This enables people to get to work quickly and shortens the setup time required.
Insist upon an open, respectful, engaging environment where everyone feels they are being heard.
Be realistic about resources. Prioritize, focus on finishing the top few, then move on to the next cycle.
Commit to moving forward with chartered opportunities and ensuring the necessary resources are available.
Instill a rigorous follow-up process.